Inflation rose by 6.1 per cent over the past 12 months, its highest level in over two decades, as the Treasurer warns some Australians are being forced to choose between "vegetables and rent".
Consumer price index figures released on Wednesday revealed a 1.8 per cent inflation spike in the June quarter, in another sign a cost-of-living crisis gripping the nation is set to deepen.
Treasurer Jim Chalmers on Wednesday described the rise was confronting, saying it would "get tougher before it starts to ease".
"It's not news to millions of Australians who feel this inflation challenge every time they go to the supermarket and every time the bills arrive," he said.
"This inflation outcome today mirrors the lived experience of Australians who are doing a tough right now.
"The most vulnerable people are making decisions between vegetables and rent."
Recent home buyers bore the heaviest brunt, with new home dwellings by owner-occupiers rising 5.6 per cent. Fuel prices continued to rise, by 4.2 per cent, despite an ongoing cut to the fuel excise, set to end in September.
But with international oil prices tipped to lower in the coming months, the Treasurer demanded petrol station owners pass on relief at the bowser as soon as possible.
"Australian motorists, for good reason, get absolutely filthy [that] when the global price goes up. the price rise gets passed on immediately," he said.
"When the global wholesale price comes down, it seems to take longer. Australians are filthy about that and they should be.
"Service station owners, the companies, shouldn't treat Australian motorists as mugs, people desperately need some relief."
Russia's invasion of Ukraine, coming as the global economy recovered from the COVID-19 pandemic, has driven rising inflation across the globe. China's pursuit of a zero COVID-19 policy has also hampered international markets.
Dr Chalmers described Australian inflation as "primarily but not exclusively" propelled by international factors.
"There are domestic factors as well ... I want to reassure [Australians] that the government is very focused on those domestic factors," he said.
The Treasurer noted the updated figures did not include an electricity spike coming into effect in July, warning of a "price pressure to follow".
Dr Chalmers has already warned an update on Australia's economy, to be delivered on Thursday, will make for grim reading.
"What I will explain tomorrow tomorrow is that the things that have been working for us in the budget are temporary, highly temporary, and some of the challenges are more enduring," he said.
"Part of those enduring challenges in the budget will be the impact of some of the revisions that we'll have to do to our economic forecasts."
In the lead up to the May election, Labor urged the Fair Work Commission to raise the minimum wage to keep pace with inflation.
Dr Chalmers was non-committal on whether that would continue, as inflation continued to climb, but said the government would make its submission "in time".
"Each time that the Fair Work Commission meets to determine the minimum wage, they should take into consideration the whole range of economic conditions," he said.
The cost of consumer goods also climbed, with clothing and footwear rising by 3.5 per cent over the last quarter.
Buyers of food and non-alcoholic beverages (2 per cent) and alcohol and tobacco (0.8 per cent) also took hits over the past three months.
Australian Chamber of Commerce and Industry chief executive Andrew McKellar described the rise as an "alarming new peak" which would hit households and businesses.
"In this international economic context, the ACTU's recent assertion that business is to blame for inflation is driven by politics, not facts," he said.
"The reality is businesses are absorbing cost increases where they can. But, with inflation continuing to sting employers, higher consumer prices will persist in the months ahead."
It came as the International Monetary Fund warned the global economy could be heading towards recession.
In a report published on Tuesday, the IMF downgraded its global economic forecast, with the world's three largest economies - the United States, China, and the Eurozone - in the grip of rising inflation "triggering a tightening of global financial condition".
It was the second time the IMF has downgraded the forecast this year.
"The world may soon be teetering on the edge of a global recession, only two years after the last one," IMF economic counsellor Pierre-Olivier Gourincha said.
Finn McHugh
Finn McHugh has been federal political reporter for The Canberra Times since July 2021. He joined the Canberra Press Gallery in 2019 where he was executive producer of Sky News's AM Agenda, before joining NCA NewsWire as a federal political reporter. He has previously interned at the Kuwait Times.
Finn McHugh has been federal political reporter for The Canberra Times since July 2021. He joined the Canberra Press Gallery in 2019 where he was executive producer of Sky News's AM Agenda, before joining NCA NewsWire as a federal political reporter. He has previously interned at the Kuwait Times.
