Consumer inflation tipped to hit 4.5% in March as Australian cost of living soars

As both a fruiter and builder, Anthony Todarello can reel off more goods that have soared in price in the past year than most people.

Food prices will feature prominently when the Australian Bureau of Statistics releases the March quarter consumer price inflation figures on Wednesday. The so-called headline rate is set to come in at about 4.5%, not far shy of the 5% pace last reached in 2008.

Another consequence of rising prices is that the Reserve Bank is running out of excuses not to lift the official cash rate target from its record low 0.1% level.

The squeeze is particularly hurting builders of large numbers of houses, with some opting to put in clauses to break contracts rather than wear ballooning losses.

Banks, meanwhile, are already pushing up fixed-rate loans in expectation of their own higher costs of borrowing.

NAB, for instance, has hiked some fixed rates almost 3 percentage points in the last year. Its four-year mortgage rate has gone from 1.98% to 4.49%, the data group said.

Household power bills will also be increasing as rising coal and gas costs for generators lift wholesale tariffs.

Pandemic-related shortages have also added to price pressures, including from the latest lockdowns in China, where the government continues to pursue a zero Covid policy. The most recent closures, such as in Shanghai and now Beijing, will elevate prices this quarter and later, with increases hinging on how much production and transport are affected.