Millions of Aussies have been delivered a blow as inflation rises to its highest level in almost three years.
Australian Bureau of Statistics revealed on Wednesday headline inflation picked up to 1.1 per cent in March while annual inflation is at 4.6 per cent - up from 3.7 per cent.
It marks the fastest annual pace of price growth since September 2023, reversing several months of easing inflation pressures.
The release is Australia's first inflation read to reflect the economic fallout from the Middle East war, intensifying pressure on the Reserve Bank of Australia ahead of its policy meeting next week on May 5.
All of the Big Four banks are forecasting another cash rate hike of 0.25 percentage basis points, bringing the figure up to 4.35 per cent.
If the interest rate is increased, that could mean mortgage holders will be paying a further $157 a month on a $1million loan, according to Compare the Market.
Domain's chief economist Nicola Powell said the uptick in inflation 'absolutely confirms' another rate hike is around the corner.
'Ultimately, what it's capturing is the war in the Middle East so all the impacts of the spike in fuel prices will be captured in this,' she said.
The Albanese government has been criticised for inflation being higher before the war began
'It's concerning that we've obviously seen that spike in inflation.'
Disruptions to global oil supplies pushed fuel costs sharply higher.
Prices jumped about 35 per cent over the month as Brent crude traded around US$110 a barrel on Wednesday, up from roughly US$60 at the start of the year.
Oil prices have remained elevated since the conflict began.
Fuel drove much of the March inflation spike, despite making up only a small share of the Consumer Price Index basket.
'Automotive fuel is a large and frequent expenditure item for households,' the ABS said.
'This is reflected in the CPI with automotive fuel having a weight of 3.5 per cent of the CPI basket.'
ABS data showed the average price for regular unleaded rose from 171 cents a litre in February to 228 cents in March.
ABS data showed the average price for regular unleaded rose from 171 cents a litre in February to 228 cents in March (stock image)
Premium unleaded rose 30 per cent to 250 cents per litre while diesel rose 41 per cent from 181 cents per litre to 256 cents.
Temporary relief from the Albanese government's halving of the fuel excise is due to expire on June 30, and it remains unclear whether the measure will be extended.
More troubling for policymakers, core inflation rose strongly again and remains well above the RBA's two to three per cent target band, signalling persistent domestic price pressures.
Australia continues to record higher inflation than any major advanced economy, running about one and a half percentage points above the United States and the United Kingdom.
The strength of the data leaves the RBA with little room to move, with economists widely expecting an interest rate rise next week.
The Albanese government has pointed to the Middle East war as a key trigger for the latest surge in inflation, but the opposition argues price pressures were already building well before the conflict erupted.
Inflation rose 3.7 per cent over the year to February, prior to the war, leaving it firmly above the Reserve Bank's two to three per cent target band and raising questions about the extent to which global events alone are driving rising prices.
more to come