Scott Morrison has warned that Australia is not immune from the negative global economic fallout from Russia's invasion of Ukraine.
The prime minister told a business conference in Perth the world is facing the biggest energy shock since the 1970s.
"That is likely to depress global growth and we know higher oil prices means greater pressure on family budgets at the petrol bowser," Mr Morrison warned the Chamber of Commerce and Industry WA.
Petrol prices have struck record levels above $2 per litre in the past week.
The government is reportedly working on a package to assist families in this month's federal budget.
But Opposition Leader Anthony Albanese said everyone knows cost-of-living pressures have not just arrived because of the Ukraine conflict.
"They've been there for some time and they rise when wages don't keep up with the price of petrol, the price of groceries, the price of rent," he told reporters in Brisbane on Wednesday.
He said petrol prices were approaching $2 a litre before the outrageous invasion of Ukraine.
Indeed, the current annual inflation rate at 3.5 per cent was measured in the December quarter 2021, and was then largely the result of rising fuel costs.
Some economists believe inflation could now reach five per cent.
In the minutes of its March 1 board meeting released on Tuesday, the Reserve Bank conceded the war in Ukraine has cast a cloud over the inflation outlook.
However, the RBA believes the economy remained resilient in the face of the Omicron variant and activity is expected to pick up.
The Westpac-Melbourne Institute leading index was indicating only a modest recovery at this stage.
The index, which indicates the likely pace of economic activity three to nine months into the future, rose from minus 0.5 per cent in January to minus 0.25 per cent in February.
"While the growth rate lifted in February, the latest read remains in negative territory but only slightly below trend," Westpac chief economist Bill Evans said.
The long term annual growth rate is considered to be around 2.8 per cent.
But Mr Evans says in contrast to this cautious signal from the leading index Westpac is expecting strong above-trend growth in 2022, largely due to the aftermath of extraordinary emergency policy measures taken during the pandemic.
Australian households have accumulated around $250 billion in excess savings, providing considerable spending power.
"Not surprisingly, the leading index is likely to be understating the delayed impacts of these extraordinary emergency policies," Mr Evans said.
The Australian Bureau of Statistics will release its labour force report for February on Thursday, which economists expect will see the unemployment edged down to 4.1 per cent from 4.2 per cent.
This would be the lowest level since 2008.
The RBA expects the unemployment rate to fall below four per cent this year, and to levels not seen since the early-to-mid-1970s.
The ABS released its latest household impact from COVID-19 survey for the period February 9 to 18.
It found around one-quarter of Australians reported that the job situation of someone in their household had changed in one or more ways in the previous four weeks due to pandemic.
Nearly a quarter of these had concerns about contracting COVID-19, while 20 per cent reported an increased workplace demand and the same proportion blamed it on the absent work colleagues.
