Australian inflation surged to its most rapid pace in over five years, hitting a 5-1/2 year-high record, according to figures released on Wednesday. However, economic recovery seems fleeting as virus disruptions continue to press and energy prices fluctuate.
The headline consumer price index (CPI) increased 0.3% in the first quarter, recording a 2.2% inflation rate from its initial record of 1.8%. This has surpassed the 2.0% forecast and came to be the most extreme reading since the third quarter of 2014.
Moreover, the record also breached the Reserve Bank of Australia’s 2-3% target band since early 2018. This could have led to an urgent recovery in wage growth.
A key measure of underlying inflation increased 0.5% in the first quarter, adding 1.8% to the annual total. The increase was mainly from food, education, drugs, and tobacco taxes. However, it reversed drastically since March when the economy halted and world prices contracted. These downturns increased the possibility of the largest contraction ever to be recorded this quarter.