Australians could face significantly higher living costs as inflation is expected to rise toward five per cent due to the ongoing war in Iran, Treasurer Jim Chalmers has warned. He said surging global oil prices are likely to push inflation well above the current 3.8 per cent rate, far exceeding the Reserve Bank’s two to three per cent target.
Chalmers explained that forecasts show inflation could peak in the mid to high 4 per cent range, factoring in realistic assumptions about oil prices and their flow-on effects to the economy. He dismissed fears of a recession but acknowledged the broader impact on consumers, with fuel, groceries, and home loan repayments likely to increase.
The federal and state governments have convened emergency roundtables to address the potential ripple effects from rising fuel costs, as shipping companies and markets react nervously to supply disruptions. Analysts estimate that households could spend an extra $220 a month due to higher prices across essentials.
The conflict in Iran, now in its third week, has disrupted oil flows through the Strait of Hormuz, which normally carries about 20 per cent of the world’s oil supply. In response, the International Energy Agency has released a historic 400 million barrels from its emergency reserves, while Australia has tapped 20 per cent of its petrol and diesel reserves to manage shortages.
Energy Minister Chris Bowen confirmed that the country currently has 1.6 billion litres of petrol, 2.7 billion litres of diesel, and 800 million litres of jet fuel in reserve, enough for 37 days of petrol, 30 days of diesel, and 29 days of jet fuel supply.
