Australian Inflation Was Elevated Even Before Iran Oil Shock

Australian inflation remained elevated in February, and subsequent disruption from the Iran war has driven gasoline prices materially higher, creating upside risk to consumer price growth. Persistent price pressures increase the probability of further tightening by the Reserve Bank of Australia and could push Australian bond yields up while weighing on real incomes and energy-sensitive sectors.

Analysis

Australian inflation remained elevated in February, and subsequent disruption from the Iran war has driven gasoline prices materially higher, creating upside risk to consumer price growth. Persistent price pressures increase the probability of further tightening by the Reserve Bank of Australia and could push Australian bond yields up while weighing on real incomes and energy-sensitive sectors.