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SYDNEY — Australian consumer prices rose by much more than expected in the fourth quarter of 2021, which could set the stage for Australia’s first rise in official interest rates in over a decade.
The consumer price index rose 1.3% in the final three months of 2021, and 3.5% annually, according to the Australian Bureau of Statistics.
Underlying inflation rose 1.0% in the quarter and by 2.6% from a year earlier, the highest since 2014.
The data will help cement financial market expectations that the RBA will have to raise interest rates this year, stepping back from its recent guidance that policy settings might be left unchanged until 2024.
The strong result was supported by a 4.2% rise in new dwelling costs and 6.6% increase in automotive fuel costs, the ABS said.
“Shortages of building supplies and labor, combined with continued strong demand for new dwellings, contributed to price increases for newly built houses, townhouses and apartments,” said Michelle Marquardt, head of prices statistics at the statistics bureau.
The cost of domestic holiday travel and accommodation rose 4.8% over the quarter, reflecting increased demand due to the easing of Delta-related domestic border restrictions in late October and the lead-up to the Christmas holiday period, the ABS added.
Global supply chain disruptions and material shortages, combined with rising freight costs and high demand, contributed to price increases across a wide range of goods, including dwelling construction materials, motor vehicles, furniture and audio-visual equipment, the ABS said.
