Voters give budget worst marks in five years, according to poll; Trump says planned attacks on Iran called off; WHO sends team of experts to the Congo as Ebola death toll reaches 110

The Central Bank’s chief economist has warned that businesses from the construction sector to retail could increase prices further in the near term as the effects of the war against Iran spread across the country.

Speaking in Sydney this morning, Sarah Hunter said the rise in oil prices since the start of the war had been “particularly difficult to manage” given that it had driven up inflation at a time when the Australian economy was already dealing with cost pressures.

“Given these initial conditions, our research suggests that pass-through will be faster and more extensive, and the risk of inflation expectations shifting upwards increases,” he said.

The bank has raised official interest rates to 4.35 percent in its last three meetings. Financial markets predict the probability of further interest rate hikes next month to be only 22 percent.

Hunter said the bank is already hearing from businesses about plans to raise its prices.
“Expectations regarding consumer prices vary, but we hear from some quarters that
“Companies are planning to increase retail prices,” he said.

“For example, some construction firms with relatively high exposure to raw material cost increases from transportation and oil are reviewing the prices of new contracts.”