Skyrocketing fuel prices, ignited by escalating conflict in the Middle East, are casting a long shadow over Australia's economic recovery.
Following US-Israeli strikes and Iran's subsequent threats to block the Strait of Hormuz—a vital artery for 20% of the world's oil—petrol prices in Australian capitals have surged.
The volatility arrives during a data lull, leaving the Reserve Bank of Australia to keenly monitor global developments for domestic fallout.
RBA Governor Michele Bullock has issued a stark warning regarding the unpredictability of these supply shocks.
"The potential implications for inflation expectations are something we are very alert to," she noted, though she acknowledged that a prolonged global slowdown could, conversely, exert downward pressure on inflation.
While headline inflation sits at 3.8%, the RBA's preferred measure—underlying inflation—climbed to 3.4% in January.
This remains stubbornly above the bank’s target range of 2% to 3%.
The persistence of these price pressures has prompted Bullock to declare that the upcoming interest rate decision on March 17 is "live," raising the genuine prospect of back-to-back hikes to the cash rate.