Investing.com-- Australian inflation is expected to rise, while economic growth in the March quarter could sink by as much as 25 basis points in the aftermath of Cyclone Alfred, according to comments from Treasurer Jim Chalmers carried by local media.
Chalmers- who will give a speech to the Queensland Media Club on Tuesday, is expected to flag an about A$1.2 billion ($759 million) impact to the Australia economy from Cyclone Alfred, local media reported, citing his prepared remarks for the address.
Alfred battered Brisbane earlier this month, while also causing flash flooding and power outages along Australia’s east coast, especially in Queensland and New South Wales.
Chalmers is expected to also flag a potential increase in inflation from rebuilding efforts in the wake of the cyclone, with the government expected to make some funding allocations towards the effort.
But the infusion of more cash could underpin inflation in the near-term, stymieing efforts from the Reserve Bank of Australia to curb price pressures.
The RBA cut interest rates in February for the first time in nearly five years, citing some progress towards bringing down inflation. But the central bank warned that further easing will be largely contingent on more signs of falling inflation.
The RBA’s rate cut was also driven by signs of a cooling Australian economy, with the impact of Cyclone Alfred likely to add to this trend.