Perth prices soar 7.6 per cent

Higher homebuilding costs have contributed to a price surge in Perth, with inflation at 7.6 per cent.

It was the highest inflation rate in the city over a 12 month period since 1990, and Perth posted the biggest price rise in the country.

Prices in Perth rose 3.3 per cent in the March quarter alone, according to the Australian Bureau of Statistics.

National inflation was 5.1 per cent for the 12 months to March.

In Perth, fuel (11.1 per cent), non-durable household products (7.4 per cent) and rents (2.3 per cent) were all higher in the March quarter.

But the biggest lift was in new house costs, up 15.8 per cent.

That was driven by increasing material and labour costs, and reduced state and federal grant programs, the ABS said.

The national rise will put increased pressure on the Reserve Bank of Australia to lift interest rates in its meeting in May.

Inflation has been a worldwide phenomenon in the past year, with countries such as the United States posting price rises at the highest level in decades.

That was long before the war in Ukraine.

In the 12 months to December, US inflation was 7 per cent.

Years of easy monetary policy and COVID-era fiscal stimulus have helped create an environment with upward pressure on prices.

Spiking demand for commodities such as steel, driven by construction booms in many countries, led to price rises and supply shortages.

COVID lockdowns and disruptions to freight supply chains also added to pressure.

Indeed Asia Pacific economist Callam Pickering pointed to supply chain issues and the Ukraine War as pushing inflation to the highest level nationally since 2000.

“The inflation genie is well-and-truly out of the bottle,” Mr Pickering said.

“In response, the Reserve Bank has no choice but to raise rates next week.

“The real question becomes whether they view a 15 basis point increase as sufficient or simply jump immediately to a cash rate of 0.5 per cent. 

“Either way, households and businesses must prepare themselves for a series of rate hikes this year.”