Inflation has jumped to the surprise of economists. Picture: NewsWire \/ John Appleyard <\/p>\n
An \u201cabsolute shocker\u201d inflation report has dashed any hopes of back-to-back interest rate cuts.<\/p>\n
Following several months of easing inflation, Australia\u2019s cost of living jumped for July.<\/p>\n
Inflation climbed to 2.8 per cent \u2013 its highest level since July 2024 \u2013 from 1.9 per cent in June, according to the Australian Bureau of Statistics.<\/p>\n
The all-important trimmed mean inflation rate, the Reserve Bank\u2019s preferred measure<\/p>\n
as it strips out seasonality and volatile items, came in at 2.7 per cent.<\/p>\n
Betashare chief economist David Bassanese said Wednesday\u2019s report would impact future rate cuts.<\/p>\n
\u201cAll that said, today\u2019s shock CPI report does not necessarily rule out further RBA rate cuts,\u201d he said.<\/p>\n
\u201cIt\u2019s still quite possible that the RBA cuts rates in November, though it\u2019s no longer the done deal we previously believed.\u201d<\/p>\n
The higher-than-expected inflation figure follows the RBA cutting interest rates by 25 basis points to 3.60 per cent earlier this month.<\/p>\n
VanEck head of investments and capital markets Russel Chesler labelled Wednesday\u2019s results \u201cdisappointing\u201d given the run of easing inflation to date.<\/p>\n
\u201cThis inflation spike, combined with the recency of the last rate cut and continued strength of the labour market, reinforce our expectation that another rate cut is unlikely before November,\u201d he said.<\/p>\n
\u201cWe don\u2019t anticipate today\u2019s surprise increase in inflation will have a material impact on markets and the broader economy.\u201d<\/p>\n
Inflation jumped to the surprise of economists. Picture: NewsWire \/ John Appleyard <\/p>\n
Treasurer Jim Chalmers watered down the unexpected uptick in inflation and said it was the \u201ceighth month in a row that headline and underlying inflation have come in below three per cent\u201d.<\/p>\n
Mr Chalmers pointed to the end of state energy rebates, among fuel and travel prices for the higher than expected number.<\/p>\n
\u201cVolatile and one-off factors including the end of state energy rebates, travel prices and fuel were behind the increase in today\u2019s results,\u201d he said.<\/p>\n
\u201cWe know monthly inflation figures can jump around and are less reliable than the quarterly figures because they don\u2019t compare the same basket of goods and services from month to month.\u201d<\/p>\n
Treasurer Jim Chalmers watered down the jump in inflation. Picture: NewsWire \/ Martin Ollman <\/p>\n
Despite the jump in Wednesday\u2019s figures, Oxford Economics head of macroeconomic forecasting Sean Langcake said the monthly indicator was only a partial read on inflation.<\/p>\n
\u201cThe RBA is likely to wait until they have full information on inflation in quarter three before changing policy settings,\u201d he said.<\/p>\n
\u201cDespite some upside in these data, we expect a fairly benign print for core inflation in quarter three overall, which will pave the way for a November rate cut.\u201d.<\/p>\n
Market expectations of an interest-rate cut in September slipped to just 23 per cent, but economists are still fully pricing in a rate cut in November.<\/p>\n
The largest contributors to inflation were a 3.6 per cent rise in housing as well as alcohol and tobacco jumping 6.5 per cent.<\/p>\n
State governments ending rebates also led to a jump in the monthly inflation figures.<\/p>\n
The price of energy spiked 13.1 per cent in July despite prices falling by 6.3 per cent the year prior.<\/p>\n
NSW and ACT households didn\u2019t receive payments from the extended Commonwealth Energy Bill Relief Fund in July and will instead be given those rebates in August, leaving residents with higher out-of-pocket costs in July.<\/p>\n
The price of coffee, tea and cocoa rising 14.4 per cent in the past 12 months also contributed to Wednesday\u2019s result, according to the ABS.<\/p>\n
The ASX 200 briefly fell by 0.3 per cent on the back of the inflation news, while the Australian dollar jumped 0.2 per cent and is now buying 65.05 US cents.<\/p>\n","protected":false},"excerpt":{"rendered":"Inflation has jumped to the surprise of economists. Picture: NewsWire \/ John Appleyard An \u201cabsolute shocker\u201d inflation report…\n","protected":false},"author":2,"featured_media":27054,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[174],"tags":[79,179,18,19,22044,22043,22045,17,22042],"class_list":{"0":"post-27053","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-eire","11":"tag-ie","12":"tag-inflation-figure","13":"tag-inflation-figures","14":"tag-inflation-report","15":"tag-ireland","16":"tag-jim-chalmers"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/27053","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=27053"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/27053\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/27054"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=27053"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=27053"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=27053"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}