Treasurer Jim Chalmers has warned inflation could “peak higher” than the March surge amid fuel shocks from the Iran war.
Annual headline inflation jumped from 3.7 per cent to 4.6 per cent in March, official figures put out on Wednesday showed.
Core inflation, which the Reserve Bank prioritises, kept steady at 3.3 per cent.
Responding to the quarterly posting, Mr Chalmers put the headline figure down to fallout from the Iran conflict, which has cut a fifth of the world’s usual oil supply and driven fuel prices to historic highs.
“We already had an inflation challenge in our economy before the conflict, but the tick up in the monthly headline data today was driven by the conflict, and this war could drive inflation up even higher before it comes back down again,” he told reporters.
“We’ve seen the war play out in headline inflation today, and we know that it will be increasingly reflected in other measures of inflation in the coming months as well.
“Treasury’s expectation is that inflation is likely to peak higher than this, but they are still finalising their forecasts ahead of the budget next month.”
He went on to say that Australia was not alone.
“If you look around the world, what you’ve seen is that inflation has come in higher across every major advanced economy,” Mr Chalmers said.
“And even with this spike in inflation from higher fuel prices coming out of the Middle East, we still have inflation substantially lower than what we inherited and what we saw in 2022.”
He added: “We know the Australian economy is not immune from all of this global uncertainty and volatility and unpredictable conditions, but we are better placed and better prepared, and with faster growth than any major advanced economy to finish out 2025.”
More to come
