Inflation rises in Australia again – prompting fears of another hike for mortgage holders

Inflation exceeded expectations, rising 3.6 percent in the 12 months to April.

The monthly consumer price index rose slightly to 3.5 percent year-on-year to March, the Australian Bureau of Statistics said.

Economists expected the monthly price gauge, which can be volatile and not as comprehensive as the quarterly indicator, to moderate slightly to 3.4 percent in April.

Households have been financially exhausted by the higher cost of living and the range of interest rates that followed to control price pressures.

The Reserve Bank of Australia remains alert to inflation risks as it works to return consumer price growth to the target range of two percent and three percent.

According to central bank forecasts, it will take until the end of 2025 for inflation to fall within the target range.

ABS head of prices statistics Michelle Marquardt said inflation had been relatively stable over the past five months.

“Although this is the second month in a row in which annual inflation has seen a small increase,” she said on Wednesday.

The top contributors to the annual increase were housing (4.9 percent), food and non-alcoholic beverages (3.8 percent), alcohol and tobacco (6.5 percent) and transportation (4.2 percent).

The result is likely to fuel fears that the RBA may have to implement another rate hike, which Governor Michele Bullock has not ruled out.

“We don’t think we’ll necessarily have to tighten again, but we can’t rule it out,” she told reporters in Sydney earlier this month.

‘If we have to, we will. If we really think inflation will be persistent and significantly above our expectations, we will tighten again.

“We’ve always felt it was a little too early to declare victory and I think the numbers in recent weeks have shown that for us.”

Ms Bullock also confirmed that a rate hike was seriously considered at the RBA’s two-day board meeting.

“Yes, that was one of the things the board discussed,” she said.

‘The board has therefore discussed the possibility of increasing interest rates.’

Cash rates are already at a twelve-year high of 4.35 percent, and borrowers are paying 68 percent more per month compared to two years ago – after thirteen interest rate increases in eighteen months.

“The increase in interest rates needed to reduce inflation has been painful for many people,” she said.

“Inflation is bad for everyone and we have to get through it.

“The path is likely to remain bumpy and we all need to be prepared for that.”