Headline inflation accelerated dramatically in March, with consumer prices increasing at an annual pace of 4.6 per cent, up from 3.7 per cent in February.<\/p>\n
Economists had been expecting inflation to jump higher because the war in the Middle East had caused the largest global energy shock since the oil crises of the 1970s and 80s.<\/p>\n
Australian Bureau of Statistics (ABS) data shows the consumer price index (CPI) rose by 1.1 per cent in March, driven by transport prices, which rose 9.2 per cent due primarily to a 32.8 per cent monthly increase in automotive fuel prices.<\/p>\n
However, trimmed mean inflation, which is the Reserve Bank’s preferred measure of underlying inflation, remained steady in March at 3.3 per cent.<\/p>\n
The ABS says when prices for some items change significantly, such as automotive fuel, the trimmed mean measure of inflation can give more insights into how inflation is trending.<\/p>\n
The Reserve Bank of Australia wants inflation to average 2.5 per cent over the medium term.<\/p>\n
Fuel prices and inflation<\/p>\n
The surge in fuel prices in March was so large that the ABS has published a dedicated page<\/a> explaining how fuel prices affect the CPI measurement.<\/p>\n The ABS says the conflict in the Middle East and interruption of oil passing through the Strait of Hormuz has reduced the supply of oil exports from the region this year.\u00a0<\/p>\n It says the supply disruption has seen significant volatility in the global price of oil, which has led to higher petrol and diesel prices all around the world.<\/p>\n The disruption saw automotive fuel prices spike last month, increasing by 32.8 per cent from the previous month.\u00a0<\/p>\n