Rate fears on Aussie price rises

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Inflation in Australia has risen by more than had been expected.

The latest numbers showed a 0.9% rise in the second quarter. Analysts had been expecting a figure closer to 0.7%. For the year as a whole, inflation is up 3.6%, the fastest rise in nearly three years.

Expecations that the country's central bank will raise interest rates to combat inflation have sent the Australian dollar soaring to its highest level in 29 years.

Analysts say that rising food prices, debt concerns in both Europe and America, as well as a local flood tax have all made Australian consumers very cautious.

Michael McCarthy of CMC Markets says the country's retailers are struggling as Australians favour saving over spending.

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