Reserve Bank warns inflation staying elevated as oil prices spike
RBA Governor Michele Bullock said inflation will remain elevated through mid-2027 as Middle East conflict pushes crude oil above US$105 a barrel.
Reserve Bank Governor Michele Bullock told parliament on Friday that inflation will stay elevated for some time. Oil prices have spiked due to the Middle East conflict, hitting US$105 a barrel this week after Iranian-backed militia fired drones at Saudi Arabia's main pipeline.
Higher fuel costs feed directly into petrol prices and force companies to raise the cost of other goods. Inflation sat at 3.5 per cent in July but remained above the RBA's target band of 2 to 3 per cent.
Financial markets now price an 82 per cent chance of an interest rate rise by early November, which would take the cash rate to a 15-year high of 4.6 per cent. The RBA does not expect inflation to fall back within target until mid-2027.
- 3.5 per cent
- Current inflation rate
- $US105 a barrel
- Oil price this week
- 12 consecutive months
- Months above target
- 4.6 per cent
- Predicted rate if raised
Why it mattersHigher interest rates could increase costs for households already struggling with inflation.
AustraliaAustralian households face ongoing pressure on mortgage rates and household budgets as the RBA keeps rates higher for longer due to stubborn inflation.
✓ Claims checked against the source and corrected before publish. checked 7 d ago
