Reserve Bank Governor Michele Bullock has cautioned that a potential oil price shock stemming from the conflict in Iran could exacerbate local inflationary pressures, as new research identifies inflation as the primary economic concern for Australians.
Addressing the Australian Financial Review Business Summit on March 3, Bullock noted that recent hostilities between Iran and the United States serve as a volatile reminder of how quickly global conditions can shift.
"It's too early to say what the impact will be; events are moving rapidly and there are different ways this can play out," Bullock stated, adding that while a supply shock could hike prices, a global slowdown might eventually depress them.
"It is not obvious how this might play out," she remarked.
Following last month’s rate rise to 3.85%, underlying inflation remains sticky at 3.4%.
Bullock warned that the longer inflation stays above the 2% to 3% target, the greater the risk that "people expect inflation to stay high."
An inaugural RBA survey conducted by JWS Research confirmed that households now fear inflation more than job security.
"Our survey consistently identified inflation as the public's top concern in 2025," Bullock said.
She highlighted the human cost, noting that "people need to spend more time searching for the lowest prices and working out how to make ends meet," which often forces families to "delay non-urgent medical care."
With the labour market remaining tight, Bullock remains "alert" to shifting expectations ahead of the RBA's March 16-17 meeting.