The ASX took a dive today, falling 1.16% or 89.90 points, undoing much of the progress made over the last three months, settling at 7,676.8 points and crossing below its 50-day moving average.
Overall, the index has lost an eye-watering 2.18% over the last five days, now sitting 2.95% below its 52-week high.
All sectors were in the red, with Financials, Consumer Staples and Industrials losing more than 1.5%.
The main culprit for the drop was higher than anticipated interest rate data for last month, which rose 0.1% to 3.6% in April.
"Today's data will be ringing alarm bells down at the RBA," Business Council of Australia chief economist Stephen Walters said.
"This is a terrible start to inflation for the June quarter. Inflation is accelerating on all main measures, not receding as had been hoped, thanks mainly to sticky services prices.
"Further interest rate hikes are unlikely but, after today's upside inflation surprise, no longer can be ruled out.”
Treasurers at war over CPI
With inflation higher than expected yet again this month, Opposition Shadow Treasurer Angus Taylor took the opportunity to pin the inflation hike on the Federal Government’s economic policies.
"Under Labor, we've seen a collapse in Australians' standard of living and productivity. Australian households are in a recession," Taylor said in a statement.
"But instead of reining in spending and getting government out of the way, the Albanese Labor Government has been doing the opposite."
He pointed to strong rises in food (11%), housing (14%), rent (13%), electricity (20%), gas (25%) health (11%), education (11%) and financial and insurance services (15%) as evidence the government was not doing enough to curb inflation.
Treasurer Jim Chalmers countered with the assertion that inflation began under the Coalition, with stimulus payments peaking and interest rates at rock bottom.
"The monthly inflation indicator can be volatile and is less reliable than the quarterly measure because it doesn't compare the same goods and services month to month," Chalmers stated.
"The quarterly measure shows the direction of travel is clear with annual inflation having almost halved since the Albanese Labor Government came to office.
"The ABS confirmed very clearly again today that inflation would be higher were it not for our cost-of-living policies.
"We know there is more work to do in the fight against inflation because it is still too high and people are under pressure and that's why the budget had such a big focus on providing responsible cost-of-living relief."
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