Australia’s Consumer Price Index (CPI) rose 1.0% month-on-month in July, data released by the Australian Bureau of Statistics on the 26th showed, exceeding the market consensus of 0.8%. Higher fuel and travel costs were the main drivers. The year-on-year growth rate slowed to 3.5% from 3.8%, but still came in above the 3.3% forecast.
More significant was the movement in the core inflation gauge closely watched by the Reserve Bank of Australia (RBA). The trimmed mean rose 0.5% month-on-month, far surpassing the 0.3% increase expected, and held at an elevated 3.6% year-on-year. The figure remains above the RBA’s 2–3% target range, underscoring persistent price pressures.
The RBA has already implemented three rate hikes this year. While the central bank has continued tightening to rein in inflation, the latest data suggests those efforts are still only halfway there.
Following the release, expectations for additional rate hikes strengthened rapidly across financial markets. The Australian dollar briefly rose 0.2% to $0.7176 (approximately ¥110), and the probability of another rate increase by December implied by interest rate futures jumped from around 67% before the release to 78%. Equity markets also saw gains narrow at times.
This report was the final inflation indicator to be published before the next policy meeting scheduled for late September. According to minutes from the previous meeting released earlier this month, the policy board considered an additional rate hike but ultimately decided to wait for more data.
Among market participants, some argue that given the stickiness of core inflation, the possibility of the RBA moving as early as the next meeting cannot be ruled out. On the other hand, a cautious view persists that the central bank will maintain its wait-and-see stance, citing the slowdown in year-on-year headline CPI.
Once added, BigGo Finance appears first in Google Search Top Stories, so you get the broadest, most up-to-the-minute, and most comprehensive global financial news first.