Hockey blames carbon tax for inflation spike


AAP

Treasurer Joe Hockey has blamed a strong rise in the rate of inflation on the continued impact from the former Labor government's carbon tax.

The consumer price index for the December quarter unexpectedly jumped by 0.8 per cent in the December quarter, almost double the rate expected by economists.

This pushed the annual rate of inflation to 2.7 per cent from 2.2 per cent in the previous quarter and into the top half of the Reserve Bank's two to three per cent target band.

It was the highest rate of inflation in two years.

"The inflation rate continues to be impacted by Labor's carbon tax," Mr Hockey said in a statement on Wednesday.

"Labor senators should stop standing in the way of cost-of-living relief for Australian families and vote to repeal the carbon tax when parliament resumes."

But economists have highlighted increased fruit and vegetable prices, caused by adverse weather affects, and a falling dollar.

Commonwealth Bank of Australia chief economist Michael Blythe said big increases in fruit and vegetable prices were linked to weather impacts, and the weakening Australian dollar was boosting domestic tourism.

Labor and the Australian Greens will hold the balance of power in the Senate until July, and have refused to back the government's attempts to ditch the impost.

The government believes the repeal of the carbon tax will create a stronger economy and will save families an average of $550 next financial year.