KEY POINTS:
A rising dollar will keep import prices low but burgeoning oil and petrol prices still pose a "difficult" inflation risk to the Australian economy, Treasurer Peter Costello said overnight.
Costello, speaking in London, said the economy will be more difficult to manage as a result of the dollar hitting its highest levels since October 1990 during Tuesday trading.
"It's easier to run an economy when its 47 cents (against the US dollar) than when its at 82," Costello said.
"The fact the Australian dollar is so high at the moment is a problem for exporters, I acknowledge that.
"It means it's important for us to do economic reforms to help exporters in other areas.
"It does keep our imports cheaper, and in that respect at least, it's helpful in terms of inflation.
"But there are some products that are going up, even with a strong Australian dollar - oil is one and petrol is another.
"The consequence of oil and petrol moving through the economy is something we have to adjust to, and it's something that will prove difficult.
"It means economic policy has to be very finely tuned to stop that moving into general inflation.
"We don't want inflation to escape again into the Australian economy."
The Treasurer also played down expectations of a big-spending, tax-cutting pre-election budget that goes into the red after delivering nine surpluses in 11 budgets.
"We remain committed to budget surpluses in times of economic growth," Costello said.
"I don't think there is any need in Australia to run deficits.
"There is no need to run a budget deficit in Australia, not so long as competent economic managers remain in charge."
Much of the rise in the dollar has been prompted by rising interest rates, and speculation of another impending hike by the Reserve Bank from the current rate of 6.25 per cent.
The RBA kept interest rates unchanged last week, when many economists had expected a rise following a recent spate of strong economic reports.
Some believe it could have been put off moving rates by the rising dollar, which makes it harder for exporters.
Latest ANZ Bank data showed the number of job advertisements in major metropolitan newspapers and on the internet rose by 1.9 per cent in March to a weekly average of 220,754 a week, 24.7 per cent higher than a year earlier.
At the same time the Olivier Group's internet job index found that a record 303,124 jobs were posted on the internet in March.
Meanwhile, National Australia Bank's business survey for March shows that business conditions remain at robust levels, with wages growing at a quarterly rate of 1.3 per cent.
Since September the NAB survey has shown wages growing at an annualised rate of nearly six per cent, way above the central bank's perceived 4.5 per cent comfort zone.
- AAP
