Inflation in Australia rose at a faster pace in March as Queensland's natural disasters and Libya's civil war continued to drive up prices for fruit and vegetables and petroleum products, according to the TD Securities-Melbourne Institute inflation Gauge Monday.
The TD Securities-Melbourne Institute inflation Gauge, a monthly survey by the investment dealer of TD Securities and the Melbourne Institute of Applied Economic and Social Research, rose 0.6 percent in March, following a 0.2 percent rise in February and 0.4 percent rise in January.
Over the year to March, the inflation gauge rose by 3.8 percent, compared to the 3.6 percent rise in the year to February.
It is well above the Reserve Bank of Australia's (RBA) target band of two to three percent.
Recent Australian Bureau of Statistics' (ABS) data showed the Consumer Price Index (CPI) rose by 0.4 percent in the December quarter for an annual headline inflation rate of 2.7 percent.
"Headline inflation is clearly climbing higher towards four percent, while our underlying measure is signaling more contained inflationary pressure, returning to the mid-point of the RBA's ( Reserve Bank of Australia) two to three percent target band," said Annette Beacher, head of Asia-Pacific research at TD Securities.
Beacher expects the bank to keep the cash rate on hold at 4.75 percent after its board meeting on Tuesday.
Flood-driven rises in the prices of fruit and vegetables, automotive fuel and alcohol and tobacco contributed most to the price rises in March, despite a fall in the price of household supplies and rents, TD said in a statement on Monday.
Due to an ongoing lack of supply from Queensland, the prices of fruit and vegetables rose by 11.3 percent in March, following a 5. 1 percent rise in February, the statement said.
The price of automotive fuel rose by 5.3 percent in March, building on the 1.6 percent rise in February.
During the month, war broke out in Libya, which produces two percent of the world's oil, pushing up the price of crude oil, it said.