Wednesday, January 23, 2008

Inflation down under

From the Age....

Inflation shock puts pressure on rates

AUSTRALIA'S 3 million home buyers are likely to be hit by another interest rate rise — the third in six months — after inflation rose to its highest level in 16 years.

Most economists believe the Reserve Bank will act to lift rates when its board next meets on February 5 — unless global share markets continue to dive.

Inflation figures released yesterday were far worse than expected, as higher petrol prices, bank charges and housing costs pushed the underlying inflation rate up by 1.05% in the December quarter, and 3.6% for the year. Petrol prices alone rose 14.3% for the year.