Interest rates are expected to rise sooner as Queensland rebuilds damage incurred during the devastating floodwater says economists.

The prices of imported goods were not declining fast enough to affect inflation in spite of the Australian dollar appreciating in value.
HSBC economist Paul Bloxham raised his inflation forecast for the country based on renewed wage pressure because of repairs to be made in Queensland.

In December, the TD Securities-Melbourne Institute Monthly Inflation Gauge reported a rise of 0.2 percent or about 3.8 percent for 2010.
Underlying inflation was higher at 3.2 percent, overtaking the Reserve Bank's goal of 2 to 3 percent.

Overall, prices declined for audio, visual and computing equipment, sport and other recreational products and books, newspapers and magazines in the country although rates for fuel, fruit and vegetables, travel and accommodation prices increased.

TD Securities analyst Annette Beacher said that inflation was being pushed higher, confirming that the next move for interest rates remains.
The widespread disaster left inflation risks possible and will definitely lead to a jump in food prices since Queensland is one of the major suppliers of fruit and vegetable in the country.

Bloxham added:"Food prices will rise due to the floods . . . against the backdrop of food markets which were already pretty tight.
"The more important issue is that, with the labor market already around full employment, additional expenditure on reconstruction and repair will put further upward pressure