CANBERRA, July 28 (Xinhua) -- Australian Treasurer Jim Chalmers on Tuesday warned that recent escalations of the conflict in the Middle East pose a substantial threat to global inflation.
Chalmers on Tuesday released a briefing from the Treasury warning that the world has "weaker buffers" to absorb oil supply shocks caused by the conflict.
The briefing said that the initial price shock at the outset of the conflict in February was contained by market restructuring, including the re-routing of exports and a drawdown in oil inventories, but that reserves around the world have now been depleted.
In a statement to local media, Chalmers said that Australians have already "paid too hefty a price" for a conflict on the other side of the world.
"The recent escalation of tensions in the Middle East poses a substantial threat to global inflation. There is still so much uncertainty about this war and its ongoing costs and consequences," he said. "From an economic point of view, a proper and permanent end to the war can't come soon enough."
Downside scenario modeling included in the federal budget for 2026-27, released in May, projected that a more severe Middle East conflict could cause oil prices to exceed 200 U.S. dollars per barrel in the September quarter, driving Australia's annual inflation rate to 7.25 percent.
The Australian Bureau of Statistics will release the inflation data for June on Wednesday. Westpac, one of Australia's Big Four banks, said it expects annual headline inflation to rise from 4.0 percent in May to 4.2 percent in June. ■
