Inflation Warning: RBA Chief Cites Global Events as Driver of High Prices

The Reserve Bank of Australia's Governor Michele Bullock has warned that inflation will remain elevated due to ongoing global events. The Middle East conflict and higher crude oil prices are contributing to increased costs for businesses, which they will likely pass on to consumers in the form of higher prices.

In her testimony before a House of Representatives economics committee, Bullock stated that 'higher oil prices have increased inflation directly through their impact on petrol prices but it's also had an indirect impact as many firms have passed input cost pressure arising from elevated fuel prices through to the prices of other goods and services.'

The current inflation rate in Australia is 3.5%, above the Reserve Bank's target range of 2-3%. Bullock said that 'inflation is likely to remain elevated for some time' due to excess demand and capacity pressures.

The RBA expects public demand to grow by 3.1% this financial year, which will add to total demand for goods and services and contribute to inflation.