The Reserve Bank of Australia's measure of underlying inflation, which excludes the largest price fluctuations, surged 3.8 percent in the fourth quarter from a year earlier. The headline consumer price index rose 0.9 percent from the third quarter and 3 percent on the year, a report in Sydney showed today.
Faster inflation may not be enough to convince central bank Governor Glenn Stevens to raise borrowing costs next month after stock markets tumbled around the world, prompting the U.S. Federal Reserve to cut its benchmark rate in the first emergency move since 2001. Stevens increased interest rates to an 11-year high in November after higher food, gasoline and wage costs pushed annual consumer-price gains above the bank's target range.
Gasoline costs rose 7.3 percent in the fourth quarter and deposit and loan facilities climbed 2.7 percent, while rents advanced 1.6 percent, today's report showed. By contrast, fruit prices fell 14 percent and vegetable costs slid 6.9 percent.
Inflation is likely to remain ``uncomfortably high'' as Australia enters its 17th year of economic expansion, Governor Stevens said last week in London.