SYDNEY: Consumer prices rose by 0.5 per cent in March, revealing a build-up of inflationary pressures, a survey shows.
The rise on the TD Securities - Melbourne Institute monthly inflation gauge - followed an increase of 0.8 per cent in January and 0.1 per cent in February.
The annual inflation
rate by this measure was 2.5 per cent, up from 1.9 per cent over the year to February.
The trimmed mean inflation gauge, which parallels one of the measures of underlying inflation used by the Reserve Bank of Australia (RBA), also rose by 2.5 per cent over the year to March. Both were in the middle of the RBA's 2-3 per cent medium-term inflation target.
Despite that, TD Securities senior strategist Annette Beacher warned inflation was again building up a head of steam after a pause in February.
"Both imported and domestic inflation rose solidly this month, something we've not seen for nearly 18 months," she said.
In its quarterly statement in early March, the RBA forecast underlying inflation would subside to 2.5 per cent by mid-2010, edging up to 2.75 per cent in the second half of 2011.
But this outlook was "somewhat optimistic, as Australia will be testing the speed limits of the economy sooner rather than later", Ms Beacher said.
Whether the central bank would raise the cash rate on Tuesday to 4.25 per cent from 4 per cent was a close call, but a pause in interest rate rises in April would be consistent with the RBA's theme of gradual adjustment, she said.
- AAP
