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SYDNEY: Australia: Due to the costs of home construction and gasoline, Australia’s inflation soared to a 32-year high in the third quarter, pressuring the country’s central bank to return to a more aggressive rate hike policy.

Data from the Australian Bureau of Statistics released this week reported that the consumer price index rose 1.8 percent in the September quarter, ahead of the 1.6 percent expected by the market.

The annual rate rose from 6.1 to 7.3 percent, almost three times the wage growth pace and the highest level since 1990.

The Reserve Bank of Australia predicted that core inflation would reach 6.0 percent in the December quarter, with headline inflation peaking at 7.75 percent.

“The upshot is that CPI inflation will approach 8 percent 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 of Capital Economics, as quoted by Reuters.

Meanwhile, National Australia Bank upgraded its terminal rate expectation to 3.6 percent, compared with its previous forecast of 3.1 percent. The cash rate is currently at 2.6 percent.

Also, the Australian dollar rose 0.3 percent to $0.6412, the highest level in more than two weeks.

In response to inflation concerns, the country’s ruling Labor government restrained spending in its 2022/23 budget this week, despite calls for more cost-of-living support due to soaring prices.

In response to the data, Treasurer of Australia Jim Chalmers said, “Whether it is food, whether it is electricity, whether it is rent, inflation is public enemy number one. Inflation is the dragon we need to slay.”