Inflation shock, rate rise risk jolt Australia PMs election campaign

div classBodysc17zpet90 cdBBJodivpSYDNEY Reuters – Australian Prime Minister Scott Morrison on Thursday blamed the war in Ukraine and COVIDrelated supply chain disruptions for a record rise in living costs which could jeopardise his chances of winning a national election to be held within weeks.p

pAustralian consumer prices surged at the fastest annual pace in two decades last quarter, data out on Wednesday showed, as petrol, homebuilding and food costs rose, fueling speculation interest rates could rise from record lows as soon as next week.pdivdivdiv classBodysc17zpet90 cdBBJodiv

p“We are still feeling the effects of the rather extraordinary economic times that we are living in,” Morrison said during a media briefing, adding the COVID19 lockdown in China had strained supply chains along with the Ukraine conflict. p

pAny rise in rates at the Reserve Bank of Australias next policy meeting on May 3 will result in millions of homeowners paying more money on their mortgage for the first time in a decade, just as the campaign for the May 21 election heats up.p

pTwo of Australias big four banks expect the benchmark cash rate will rise next week and a third sees increased chances of a hike. p

pThe last time the central bank raised rates in the middle of an election campaign was in 2007, and then Prime Minister John Howard went on to lose both the vote and his seat. Morrison said he does not see suffering a similar fate.p

p“We are in the middle of a global pandemic with a war in Europe, those situations were not in place in 2007 … Australians understand that,” he said. p

pMorrisons LiberalNational Party coalition, with a oneseat majority in the lower house of parliament, is trailing the centreleft Labor, polls showed, in a campaign fought over climate change, national security and costofliving pressures.p

pMorrison has been touting his conservative governments handling of the economy during the COVID19 pandemic and a faster rebound. However, with inflation rising twice as fast as wages, real incomes are in the red.