MNI BRIEF: Australian Inflation At 5.1% Pressures RBA On Rates

Australian CPI inflation surprised on the upside on Wednesday, printing at 5.1% for the first quarter of 2022 and up from 3.5% last quarter, and above expectations for a 4.5% increase.

Core inflation, which is the Reserve Bank of Australia's preferred measure, jumped to 3.7% from 2.6%, putting pressure on the central bank when it meets next week, see: MNI INSIGHT: Market Rates Pricing Races Ahead But RBA Cautious.

The RBA has a target of 2% to 3% for core inflation, and the last quarter's result was the first time inflation had been in the target range since December 2015. It is now at the highest level since 2009. Australia is in the midst of a federal election campaign, and any increase in official interest rates from the record low of 0.10% at next week's meeting would be controversial, although the RBA did raise interest rates during the 2007 campaign.