Australia’s inflation rate soared in the first quarter of this year with the fastest annual rate hike since 2001, supported by higher fuel and food costs.
The consumer price index (CPI) for the first three months of 2022, rose 5.1% from a year ago, and 2.1% higher than the fourth quarter of 2021, according to a report released by the Australian Bureau of Statistics (ABS) recently.
Both readings far exceeded market expectations, with the annual CPI projected to rise 4.6% and quarterly 1.7%.
Fuel prices rose 11% during the quarter, with most of the increase coming before Prime Minister Scott Morrison’s government reduced fuel taxes by 22.1 cents a liter for six months.
The war in Ukraine with Russia since February has been a major factor in rising energy costs as Australia is experiencing a strong recovery from the Covid-19 shutdown.
The increase indirectly strengthened investors' expectations for the Australian Central Bank (RBA) to start raising interest rates faster to curb rising price pressures.
The initial reaction of the Aussie dollar showed the antipodean currency soared following the publication of this data. However, the stronger strengthening of the US dollar limited the movement of the currency.
