Australian inflation rate surges to 4.2 percent

SYDNEY, April 23, 2008 (AFP) – Australia’s annual inflation rate soared to a six-year high of 4.2 percent, quarterly figures released Wednesday showed, outstripping expectations and increasing the chances of an interest rate rise. The Australian Bureau of Statistics said the consumer price index rose 1.3 percent in the three months to March, taking the annual inflation rate beyond the 4.0 percent predicted by economists and the central bank.

The bureau said the major contributors to the quarterly increase were pharmaceuticals, up 13.1 percent, electricity (6.0 percent), automotive fuel (5.4), rents (2.0 percent) and house purchases (1.7).

The Reserve Bank of Australia has a target inflation rate of 2.0-3.0 percent.

The central bank expressed confidence earlier this month that an annual rate of 4.0 percent in the March quarter figures meant inflation was under control in the medium term.

However, the higher-than-expected figure is likely to renew speculation about further interest rate rises, currently at a 12-year high of 7.25 percent following the latest 0.25 point hike in March.

The Australian dollar rose to 95.03 US cents shortly after the data was released, up almost a cent on Tuesday’s close of 94.04