SYDNEY, July 23, 2008 (AFP) – Australia’s annual inflation rate jumped to 4.5 percent in June, official data showed Wednesday, as Treasurer Wayne Swan warned of the toughest economic conditions in 25 years. The increase from 4.2 percent over the year to March had taken inflation to its highest level since late 1995, excluding a spike due to a tax change in July 2000, the Australian Bureau of Statistics said.
Sky-high world oil prices had helped to push inflation beyond the central bank’s target of 2.0-3.0 percent, and bringing it under control was a long-term task, Swan said.
“We have probably the most difficult conditions in 25 years, no doubt about that, in terms of the global liquidity crunch,” he added, referring to the credit squeeze following a US financial crisis.
The crunch was “putting upward pressure on rates,” the treasurer said.
High fuel prices had contributed to keeping
inflation above target, but an immediate interest rate rise was unlikely with economic growth set to cool, experts said.
The Reserve Bank of Australia (RBA) had predicted inflation would peak at 4.5 percent this year before retreating to 3.0 percent by mid-2010, said Warren Hogan, a senior economist at