Inflation reaches its peak this year due to sudden surge in shock.

Once again, inflation has reared its head, causing concern for many individuals and economists alike. The monthly consumer price index, a key indicator of inflation, has surged to its highest level this year, far surpassing the expectations of experts.

The latest data from the Australian Bureau of Statistics reveals that the monthly CPI for the month of May has reached 4 per cent, a significant jump from April's 3.6 per cent and well above the predicted 3.8 per cent. In fact, the last time it reached this level was back in November of last year, when it was sitting at 4.3 per cent.

However, there is a glimmer of good news amidst the concerning numbers. When excluding volatile items and holiday travel expenses, the CPI actually decreased from 4.1 to 4 per cent. Michelle Marquardt, the head of prices statistics at the ABS, explains that items with fluctuating prices such as automotive fuel, fruits and vegetables, and holiday travel tend to have a significant impact on the CPI. Therefore, excluding them from the headline CPI provides a better understanding of the underlying inflation, which was at 4.0 per cent in May, a slight decrease from April's 4.1 per cent.

In other news, the iconic Sydney theme park, Luna Park, is up for sale. This development comes at a time when many Australian households are eagerly awaiting an interest rate cut. However, the Reserve Bank has made it clear that inflation needs to come down to the target rate much quicker before they consider making any changes. Michele Bullock, a key figure at the RBA, stated that a lot would need to go in favor of bringing inflation back to the desired range of 2-3 per cent. The board is determined to see inflation sustainably move towards the target and will take the necessary steps to make that happen.

The Reserve Bank's next meeting to discuss interest rates is scheduled for the first week of August, after the release of the next quarterly inflation data. This data typically holds greater weight in influencing their decisions. However, in their last two meetings, the prospect of a rate hike was discussed, but ultimately, the decision was made to keep rates steady at 4.35 per cent.

The main driving force behind the unexpected rise in inflation last month was the increase in housing costs, which rose by 5.2 per cent over the last year. The ABS attributes this rise to a tight rental market across the country, with rents increasing by 7.4 per cent. Additionally, the cost of new dwellings also saw a steady rise of 4.9 per cent due to builders passing on the higher costs of labor and materials to consumers.

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