Inflation fears herald interest rise

Friday 16 July 2004

The Reserve Bank will almost certainly lift interest rates again at the end of the month, but further rises are less certain, economists say, as inflation rises toward 3 per cent.

By The Landlord

Official figures out yesterday showed annual inflation at 2.4 per cent for the June year, up from a low of 1.5 per cent in the year to March.

The June quarter inflation rate of 0.8 per cent was almost bang on the Reserve Bank's expectation, and in line with market forecasts.

Petrol prices were up almost 8 per cent in the June quarter, buying or building a new house became more expensive and energy costs continued a remorseless charge up.

These factors pushed inflation toward the top end of the Reserve Bank's inflation target of 1 per cent to 3 per cent.

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