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Explainer: Why is inflation on the rise?

Explainer: Why is inflation on the rise?

Pantry staples are increasing in price, petrol prices are soaring and tenants are facing a hike in rents. But what actually causes inflation, and how is it measured?

Inflation is well and truly back in the headlines. After years of bemoaning that prices weren’t increasing fast enough, the Reserve Bank of Australia is now grappling with just how soon and how hard it should act to bring inflation under control.

Headline inflation surged to 5.1 per cent in the first three months of the year, and the RBA doesn’t expect it to fall back within its 2 to 3 per cent target range until the middle of next year.

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Michael Read
Michael ReadEconomics correspondentMichael Read is the Financial Review's economics correspondent, reporting from the federal press gallery at Parliament House. He was previously an economist at the Reserve Bank of Australia and at UBS. Connect with Michael on Twitter. Email Michael at michael.read@afr.com

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Original URL: https://www.afr.com/policy/economy/the-shopping-basket-items-that-determine-inflation-20220215-p59wm2