Rising inflation expectations are a problem for the RBA

There are signs that Australia's electricity inflation will ease in the coming months, as domestic generation costs remain contained despite the crisis. However, the more pressing concern for policymakers is the ongoing surge in petrol prices, which has driven near-term inflation expectations sharply higher. What's more, rising inflation expectations are already beginning to feed into wage-setting decisions. Against this backdrop, the case for the RBA to continue tightening policy remains as compelling as ever.