Inflation soared during the first three months of the year, hitting the highest level since the introduction of the GST in 2000. This saw the ASX drop 56.80 points (0.78 per cent) to close at 7,261.20, setting a new 20-day low.
According to results released today from the ABS, the Consumer Price Index rose 2.1 per cent during the March quarter and 5.1 per cent annually.
Today’s results far surpassed economist predictions of 4.6 per cent. Underlying inflation lifted to 3.7 per cent, again, well over the RBA’s target of 2-3 per cent.
Trimmed mean inflation (which removes outliers) jumped 1.4 per cent, and sits at the highest annual growth rate since 2009.
“The CPI recorded its largest quarterly and annual rises since the introduction of the goods and services tax [in 2000],” Australian Bureau of Statistics head of price stats Michelle Marquardt said.
“Continued shortages of building supplies and labour, heightened freight costs and ongoing strong demand contributed to price rises for newly built dwellings.
“Fewer grant payments made this quarter from the Federal Government’s HomeBuilder program and similar state-based housing construction programs also contributed to the rise.
“The CPI’s automotive fuel series reached a record level for the third consecutive quarter, with fuel price rises seen across all three months of the March quarter.”
A rate rise is expected for May.
