Australia's inflation accelerates on rising food prices

Australia's consumer prices rose more than forecast in the second quarter as high cost of food and fuel put pressure on inflation.

Prices rose by 3.6% in the three months to the end of June from the same period last year, latest data showed.
Food prices in the country have been rising in the aftermath of the devastation caused by floods and cyclones earlier this year.
Analysts said the data may force the central bank to raise interest rates.
"It's a nasty looking number," said Michael Blythe of Commonwealth Bank of Australia.
"It suggests the direction of the next rate move is going to be up, even if there is some uncertainty about when the Reserve Bank might pull the trigger," he added.
Inflation debate

The bigger-than-forecast rise in consumer prices has already triggered a debate in the country on the impact of rising price on the economy.

While the Reserve Bank of Australia (RBA) has maintained that keeping prices in check is one of its top priorities, it has left interest rates unchanged since November 2010.
Earlier this month, Glenn Stevens, the governor of RBA said "as the temporary price shocks dissipate, CPI inflation is expected to be close to target over the next 12 months,"
However, analysts said the latest figures indicate that the central bank may have to change its stand going forward.
"It's a high number... and back to back high core inflation numbers are not a great outcome for the RBA," said Ben Jarman of JP Morgan.
"It should make the RBA nervous and their own forecasts are bound to go higher," he added.
Adam Carr of brokerage firm ICAP added that consumer prices will continue to rise further.
"This is the exact reason I have been arguing that the RBA should hike rates because these surprises were always the risk," he said.

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