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Financial markets are braced for an interest rate rise when the Reserve Bank of Australia board meets next week after annual inflation saw its biggest jump in more than two decades.

The consumer price index for the March quarter surged 2.1 per cent for an annual inflation rate of 5.1 per cent, up from 3.5 per cent previously.

The Australian Bureau of Statistics said these were the largest quarterly and annual rises since the introduction of the goods and services tax in June 2000.

When the GST was launched by former Liberal prime minister John Howard and his treasurer Peter Costello, inflation spiked to six per cent and stayed there for a year.

Treasurer Josh Frydenberg was quick to blame the latest inflation surge on international factors, particularly a further 11 per cent quarterly rise in fuel costs to be 35 per cent higher over the year.

"This is the single, biggest increase in fuel prices since Iraq's invasion of Kuwait more than 30 years ago in 1990," Mr Frydenberg told reporters in Melbourne.

"Australia is not immune from the international pressures driving up inflation. The war in Ukraine has seen a spike in fuel prices, gas prices and commodity prices being felt here at home."

He said this is why the government committed to a temporary, targeted and responsible cost of living package in the March budget.

The first $250 cost of living payments will this week hit the bank accounts of millions of eligible pensioners, income support recipients, veterans and concession card holders.

Slashing fuel excise, along with a fall in global oil prices, had also provided some relief at the bowser after petrol prices surged past $2 a litre during the March quarter.

Even so, shadow treasurer Jim Chalmers said Australians are getting "absolutely smashed", noting cost of living pressures had been building since before the war in Ukraine.

"On Scott Morrison's watch, prices are going through the roof, real wages are falling and interest rate rises are about to add to the pain that people feel right around Australia," he told reporters in Canberra.

Underlying inflation - which smooths out volatile price swings and is more crucial to the interest rate outlook - jumped 1.4 per cent to 3.7 per cent for the year.

It is the first time the underlying rate has been above the Reserve Bank of Australia's two to three per cent target since early 2010.

The result will put pressure on the RBA to lift the cash rate from a record low 0.1 per cent when its board meets next Tuesday.

Financial markets have priced in the risk of a 0.15 per cent rise in the cash rate to 0.25 per cent, which will mark the first increase since November 2010.

The RBA has previously said it wants to see a meaningful rise in wages before it takes action, and could be wary of moving during a federal election campaign.

But economists now argue global inflation is on the move, and so are other central banks, making the case for a move by the RBA sooner rather than later.

"A record low cash rate of 0.1 per cent is clearly now no longer appropriate for this economy, meaning the Reserve Bank must join other central banks around the world and tighten monetary policy," EY chief economist Cherelle Murphy said.

"To not do so risks the RBA losing credibility."

Meanwhile, consumer confidence eased slightly in the past week, coinciding with a modest increase in petrol prices, which ended four weeks of declines.

The weekly ANZ-Roy Morgan consumer confidence index - a guide to future household spending - eased 0.3 per cent to 96.5.

A level below 100 indicates pessimists outweigh optimists.

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Regional and rural voters are being directly targeted by the prime minister as he tours Queensland to spruik jobs and a strong economy.

But he and Deputy Prime Minister Barnaby Joyce faced pressure to address fighting within the Liberal-National coalition after Nationals senator Matt Canavan declared the net-zero emissions target "dead".

Scott Morrison said the coalition had an "enduring, honest partnership" and they understood what mattered to regional Australians.

He promoted the coalition as a partnership which carries the best hopes of the nation and combines the values of the country and the city.

Regional coal workers feel looked down on, something that was evident at the last election, he said in a speech to the chamber of commerce in Rockhampton.

"Their jobs and lifestyles derided or seen as somehow unworthy, in a world where the big talkers all seem to work in government, or finance, or the tech industry or the media," he said.

"That is not the country I know. I believe the vast majority of Australians in our capital cities feel a genuine affinity and connection with the Australian heartland."

In his speech to the chamber, Mr Joyce said the election wasn't a popularity contest and appealed to regional voters to trust the coalition.

"We're not asking for you to like us, we're asking for you to understand that you should have confidence in us that we know how to do our job and that we are strong," he said.

Mr Morrison said if re-elected the coalition would ensure people living in Australia's regions had the same economic opportunities as people in the cities.

Yet Labor campaign spokesperson Jason Clare said the coalition was at war with itself over climate change.

"Half the Liberal Party, most of the National Party, think climate change is what happens when you go to Hawaii for a holiday. It's time they got real," he told reporters in Sydney on Wednesday.

"(Australians) have had a gutfull of this, they're sick of politicians fighting about climate change, they just have to look out the window to know it's real."

Mr Morrison said the coalition was committed to its net-zero policy but as prime minister he needed to bring people together from different perspectives across the country.

"That debate has been done in the coalition and it is resolved and our policy was set out very clearly. (Net zero) has the strong support of the government," he said.

"We did the hard yards to get everyone together and of course, there'll be some who disagreed at the time and I suspect they still will, but that doesn't change the government's policy."

The conservative Institute of Public Affairs think tank has been campaigning in north Queensland, talking up its research showing a net zero emissions target would require the scrapping of every coal, gas and oil project in the construction pipeline at a cost of almost 480,000 jobs.

It comes as the coalition slightly improves its position in new polling but Labor remains in an election-winning position of 54.5 per cent on a two-party preferred basis.

The latest Roy Morgan poll shows the LNP gained a small 0.5 per cent during the second week of the campaign.

It's the closest result in six months.

Labor leader Anthony Albanese is due to leave COVID-19 isolation in Sydney on Thursday night, ahead of the party's official campaign launch in Perth on Sunday.

© AAP 2022

The annual rate of inflation has soared to its highest level since 2001, fuelled by rising petrol prices and higher dwelling construction costs.

The consumer price index for the March quarter surged 2.1 per cent for an annual inflation rate of 5.1 per cent, up from 3.5 per cent previously.

Underlying inflation - which smooths out volatile price swings and is more crucial to the interest rate outlook - jumped 1.4 per cent to 3.7 per cent for the year.

It is the first time the underlying rate has been above the Reserve Bank of Australia's two to three per cent target since early 2010.

The result could put pressure on the RBA to lift the cash rate from a record low 0.1 per cent when its board meets next Tuesday.

The RBA has previously said it wants to see a meaningful rise in wages before it takes action, and could be wary of moving during a federal election campaign.

But global inflation is on the move, and so are other central banks, making the case for a move by the RBA sooner rather than later.

"The only real argument for delay now is the current federal election - as was last the case in 2007, this is another good opportunity for the RBA to again demonstrate its independence," BetaShares chief economist David Bassanese said.

A rise in the cash rate will force banks to raise borrowing costs for households and businesses.

Treasurer Josh Frydenberg was on the front foot on cost of living issues before the data release. faced with a tight federal election campaign where his own seat hangs in the balance.

Mr Frydenberg says global factors such as high oil prices due to Russia's invasion of Ukraine and supply-chain disruptions are putting pressure on household budgets in Australia.

"That is why in the budget we committed to a temporary, targeted and responsible cost of living package," Mr Frydenberg told AAP.

The first $250 cost of living payments will this week hit the bank accounts of millions of eligible pensioners, income support recipients, veterans and concession card holders.

Slashing fuel excise, along with a fall in global oil prices, had provided some relief at the bowser after petrol prices surged past $2 a litre during the March quarter.

However, in the past week the Australian Institute of Petroleum said the national average for petrol prices had ticked up 2.6 cents to 168.9 cents per litre, ending four weeks of declines.

Consumer confidence eased slightly in the past week, coinciding with the modest increase in petrol prices.

The weekly ANZ-Roy Morgan consumer confidence index - a guide to future household spending - eased 0.3 per cent to 96.5.

A level below 100 indicates pessimists outweigh optimists.

© AAP 2022