QNA
Doha
Inflation in Australia kept pace with the rates witnessed by various countries of the world, especially the major economies, as Australian inflation jumped in the last quarter of 2022 to the highest level in 33 years, driven by the high cost of travel and electricity.
The Australian Bureau of Statistics data on inflation during last December, showed a strong rise in the value of the consumer price index in Australia, for the second month in a row.
According to reports, the rate of inflation on an annual basis reached 8.4 percent, which is much higher than market expectations, which pointed to a rise in inflation in Australia by 7.6 percent, after it had also increased during the month of November, and recorded 7.3 percent.
In this context, the economist Dr. Abdullah Al Khater, said in a statement to QNA that the high cost of energy in Australia had a profound impact on the consumer price index, although Australia is a major producer of gas.
He said, “As it is known, oil and gas production in Australia is in the hands of private sector companies, which market their products in the Australian market according to global market prices that are subject to supply and demand, which makes the possibility of intervention by the state through the subsidy mechanism somewhat difficult, which has led to an increase in the cost of electricity in Australia.”
LNG revenues reached $70 billion in fiscal year 2022, an increase of 130 percent year-on-year, with almost no increase in the cost of production. Australia’s natural gas production is 142.5 billion cubic meters, while gas consumption in the country is 40.9 billion cubic meters.
The economist pointed out that the climatic factors and hurricanes that Australia witnesses from time to time, in addition to the Russian-Ukrainian war, had a role in the rise in electricity prices.
Al Khater expected energy prices to decline in global markets during 2023, as a result of the precautionary policy adopted by the consuming countries by increasing the volume of its reserves of oil, especially gas, during the winter season, and thus a decline in inflation rates at a different pace from one economy to another.
In confirmation of this trend, Australia recorded a slight slowdown in the core inflation rate, as the core consumer price index (CPI) recorded 1.7 percent, which is lower than the previous forecast of 1.8 percent, and it was revised to a high of 1.9 percent, but it was also higher than market forecast, which indicated a decline to 1.5 percent.
The data shows the return of rising inflation in Australia, at a time when most of the other major economies recorded a slowdown in inflation rate, as the United States and the Eurozone witnessed a decline in the growth rate of consumer prices during the same period.
It is noteworthy that the Reserve Bank of Australia had only raised interest rates at its last meeting by 25 basis points for the third time in a row. Inflation data in Australia is a key gauge of consumer prices and the health of the economy. It strongly influences market and currency movements, where the rise in prices will prompt the Reserve Bank of Australia to raise interest rates to contain inflation, which will be strongly reflected in the movements of the Australian dollar.
