Australia's Reserve Bank says fuel will push inflation
Updated
Australia's Reserve Bank says rising fuel costs will continue to push up inflation for the rest of the year.
Our reporter Sue Lannin reports the Reserve Bank says in its quarterly statement on economic policy that higher petrol prices are likely to cause headline inflation to hit 5 per cent in the December quarter, up 0.5 cent from its previous forecast.
At the same time the RBA expects economic growth to slow to 2 per cent, increasing unemployment.
As demand slows, the bank says inflation will fall significantly next year before dropping to two-and-three-quarter per cent, within its target range, by December 2010.
It says if the weak economic conditions continue then interest rates are likely to be cut soon.
