Rising prices point to further interest rate hike in May

Inflation in recent months has grown at a faster rate than original forecasts, suggesting the Reserve Bank of Australia (RBA) could lift its official cash rate as early as next week.

According to the Australian Bureau of Statistics, the country’s consumer price index (CPI) rose 0.9 per cent in the March quarter.

In addition, the underlying trimmed rate of inflation rose by 0.8 per cent in the quarter to three per cent.

Su-Lin Ong, a senior economist at RBC Capital Markets, told the AAP that such figures could force the Reserve Bank to hike interest rates again next month.

"That was a pretty firm CPI print right across the board,’’ said the specialist.

"Inflation is clearly too high for this stage of the cycle when you have an economy that’s moving to beyond trend growth, a boom in terms of trade and limited capacity. For us, the macro economic picture argues for a rate hike next week."

Rising rates could encourage more Australians to compare credit cards and other borrowing facilities as lending conditions become more difficult. A recent report by International Business Times noted that at its board meeting earlier this month, the RBA argued that it would be "prudent" to proceed with another interest rate hike.

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