Australian CPI in focus after RBA price hike as inflation tipped to speed up
Australian inflation is predicted to speed up once more in August, placing the Consumer Price Index firmly in focus simply someday after the Reserve Bank of Australia lifted rates of interest to a 15-year excessive.
The Australian Bureau of Statistics will launch the August CPI figures as we speak, with economists anticipating annual headline inflation to rise to round 4.0%-4.1%, up from 3.5% in July.
A outcome round these ranges would push inflation additional above the RBA’s 2%-3% goal varyand reinforce the central financial institution’s issues that value pressures are proving extra persistent than anticipated.
The information arrive after the RBA on Tuesday elevated the money price by 25 foundation factors to 4.60%, its fourth hike of 2026, citing elevated home inflation and rising strain from greater world vitality prices.
Inflation anticipated to show greater
Headline CPI eased to three.5% in July from 3.8% in June, however underlying inflation remained cussed.
The trimmed imply measure held at 3.6%, whereas housing prices elevated 5.0% over the yr and meals and non-alcoholic drinks rose 3.2%.
Westpac expects August CPI to extend about 0.4% over the month and 4.0% over the yr, with greater petrol and different vitality prices more likely to play a major position.
Oil costs have risen sharply amid the dispute within the Middle East, rising prices throughout gasoline, transport and provide chains and creating one other potential supply of inflation for Australian households and companies.
That makes the underlying measures significantly necessary.
A pointy enhance in headline CPI pushed primarily by gasoline may very well be considered otherwise by the RBA from broad-based value development throughout companies, housing and different domestically generated parts.
Another price hike?
The August studying will present one of many first main checks of whether or not Tuesday’s price enhance shall be sufficient to comprise inflation or whether or not the RBA may very well be pressured to tighten coverage once more.
The central financial institution has stopped wanting declaring the present mountain climbing cycle over and has reiterated that future selections will rely upon incoming financial information.
A CPI outcome considerably above expectations, significantly if trimmed imply inflation additionally accelerates, would strengthen the case for one more enhance later this yr.
Conversely, softer underlying inflation may give the RBA extra room to pause whereas it assesses the cumulative impact of 4 price rises delivered throughout 2026.
The inflation figures will even be intently watched by monetary exchanges, the place expectations for additional financial tightening have already pushed Australian authorities bond yields greater and weighed on rate-sensitive equities.
For households, the stakes are equally excessive.
Mortgage repayments have risen considerably following this yr’s price will increase, whereas greater meals, housing and vitality costs proceed to squeeze disposable incomes.
Today’s CPI studying will subsequently assist decide whether or not Australia’s newest price hike marks a short lived pause level or one other step in a tightening cycle that also has additional to run.
