Australian inflation soared to a 32-year high last quarter
as the cost of house construction and gas skyrocketed, fueling calls for the
country’s central bank to resume more aggressive rate rises.

The Australian Bureau of Statistics (ABS) reported on
Wednesday that the consumer price index (CPI) rose 1.8% in the September
quarter, above market expectations of 1.6%.

The annual rate jumped from 6.1% to 7.3%, the highest since
1990 and nearly three times the rate of wage growth.

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The trimmed mean, a widely watched gauge of core inflation,
rose 1.8% in the quarter, bringing the annual rate to 6.1%, well above
estimates of 5.6%.

The Reserve Bank of Australia (RBA) had estimated core
inflation to peak at 6.0% in the December quarter, with headline inflation
peaking at 7.75%. The Australian dollar rose 0.3% to $0.6412, its highest level
in over two weeks.

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“The upshot is that CPI inflation will approach 8% in
Q4. The stronger-than-expected rise in consumer prices is consistent with our
forecast that the RBA will hike rates more aggressively than most
anticipate,” said Marcel Thieliant, a senior economist at Capital
Economics.

Rates have already increased by a staggering 250 basis
points since May, and the RBA had planned to proceed at a slower pace to assess
how the sharp tightening was affecting consumer spending.

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According to Wednesday’s CPI data, food costs are already
rising at a 9.0% annual rate, with the third quarter alone showing a 3.2%
increase.

Futures predict a quarter-point increase to 2.85% on
November 1, but there is now a likelihood of a half-point increase in December
and a peak for rates around 4.20% in July.

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This week, it is anticipated that the Bank of Canada and
the European Central Bank will both raise interest rates by 75 basis points,
and the Federal Reserve will likely follow suit on November 2.