Reserve Bank of Australia monitors inflation risks

The Reserve Bank of Australia (RBA) is monitoring the economy for second-round inflationary effects as businesses across the country begin raising prices to offset rising costs. While initial price spikes were linked to volatile oil prices affecting sectors like construction and logistics, economists warn that inflation becomes more difficult to control when price increases spread to services such as hairdressing, insurance, and hospitality.

At a Committee for Economic Development of Australia event, RBA Governor Michele Bullock stated that monetary policy must focus on limiting these indirect effects and ensuring inflation expectations remain anchored. The potential for widespread price increases across various goods and services has raised expectations of further interest rate hikes to curb broader economic inflation.