Australia’s inflation rate jumped sharply in March, with headline consumer prices rising 4.6 per cent annually, up from 3.7 per cent in February, as the global energy shock triggered by conflict in the Middle East rippled through the economy.
Economists had anticipated a spike, warning that the disruption to oil supply the most significant since the energy crises of the 1970s and 80s would push up costs across transport and household budgets.
New data from the Australian Bureau of Statistics (ABS) shows the consumer price index (CPI) rose 1.1 per cent in March alone. Transport costs were the biggest driver, soaring 9.2 per cent, largely due to a staggering 32.8 per cent monthly increase in automotive fuel prices.
Despite the surge in headline inflation, the trimmed mean the Reserve Bank of Australia’s preferred measure of underlying inflation held steady at 3.3 per cent. The ABS noted that trimmed mean inflation helps reveal broader trends when volatile items, such as fuel, distort the headline figure.
The Reserve Bank aims for inflation to average 2.5 per cent over the medium term. It has warned that global supply disruptions have caused extreme volatility in oil markets, pushing up petrol and diesel prices worldwide.
The spike in fuel costs was so significant that the ABS published a dedicated explainer on how fuel prices influence CPI calculations. According to the bureau, the conflict in the Middle East and reduced oil flows through the Strait of Hormuz have sharply constrained supply this year.
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