Research house Standard and Poor's (S&P) has queried the current state of inflation stating there is a mismatch between the consumer price index (CPI) and people's daily experiences.
According to S&P's latest report inflation was influenced by independent central banks and uncontrollable factors like oil.
S&P investment consultant Simon Ibbetson said consumers in developing economies were enjoying cheaper DVD players, computers and mobile phones but the raw materials to make these products have become costlier.
"With oil prices hitting $US91 a barrel it is going to impact everyone. The production of food and delivery of food is going to increase in cost," Ibbetson said.
"Water is getting scarcer and requiring more infrastructure.
Agricultural produce is going up - wheat, sugar, orange juice. What about your mortgage? How much has that gone up? What about getting a haircut?
All this is feeding through inflation."
The report came as the Australian Bureau of Statistics recent CPI data on core inflation stood at 2.9 per cent - the top end of the Reserve Bank of Australia's (RBA) 2 per cent to 3 per cent zone.
AMP chief economist Shane Oliver said the RBA would hike the interest rate to 6.75 per cent, from 6.50 per cent in its November meeting.
But Oliver said it could be worse if not for the strong economy and soaring currency, which hit 91 cents against the US dollar last week, a 23-year high.
"We're assuming rates could be on hold for the future, the rising dollar is applying downward pressure on inflation and dampening growth," he said.
Oliver said only a financial crisis could delay a rate rise.
"If a bout of panic in financial markets occurs the RBA might take the view that it can afford to wait a month to assess the situation.
But they have stressed the importance of CPI figures."
