Interest in Australian rates rising

Economic report tips higher interest rates

The South Australian Centre for Economic Studies said higher interest rates would also lead to slower economic growth next year.

Releasing its latest economic briefing, the centre said strong domestic demand, wages growth in sectors competing for skilled workers and slowing productivity growth had produced a "heady mixture for generating inflationary pressures".

Those pressures were not expected to wane in the near future, said the centre's Associate Professor Owen Covick.

"In these circumstances it is appropriate for the Reserve Bank to be increasing interest rates in order to contain these inflationary pressures," he said.