Australian consumer prices rose 3.5% in the year to July, easing from 3.8% but by less than expected, fuelling fears the Reserve Bank could impose a fourth rate hike this year, according to the Guardian.
Key facts
- Australia's CPI was 3.5% in the year to July, according to the Australian Bureau of Statistics.
- Inflation eased from 3.8% the previous month, but by less than expected, the Guardian reported.
- The figure casts doubt on the Reserve Bank meeting its 2.5% inflation target without a further hike.
- The Guardian reported growing concern over a possible fourth rate hike this year affecting millions of mortgage holders.
Fears are growing that Australia’s Reserve Bank could impose a fourth interest rate hike this year, after new data showed inflation eased in July but by less than anticipated, according to the Guardian.
The Australian Bureau of Statistics reported that consumer prices climbed 3.5% through the year to July, down from 3.8% in the previous month. While the figure represents a slight easing, the Guardian reported it fell short of expectations.
The reading casts doubt on whether the Reserve Bank can meet its 2.5% inflation target without further tightening. The Guardian reported that this has raised the prospect of a fourth rate hike affecting millions of mortgage holders, who would face higher repayments should rates rise again.
Inflation pressures are not confined to Australia. In the United States, inflation remained sticky in July, according to Al Jazeera, which reported that price pressures had worsened since the US and Israel attacked Iran, sending energy prices higher.
The developments underline the challenge central banks face in bringing inflation back to target amid global economic uncertainty and volatile energy markets.
Why it matters
Interest rate decisions directly affect the repayments of millions of mortgage holders, so the prospect of a further hike this year could squeeze household budgets. The data also highlights how stubborn inflation remains a challenge for central banks in Australia and beyond.
Frequently asked questions
What was Australia's inflation rate in July?
The Australian Bureau of Statistics reported that consumer prices climbed 3.5% through the year to July, down from 3.8% the previous month.
What is the Reserve Bank's inflation target?
The Reserve Bank aims for a 2.5% inflation target, which the July figure of 3.5% casts doubt on meeting without a further rate hike.
Why is US inflation also rising?
According to Al Jazeera, US inflation worsened after the US and Israel attacked Iran, which sent energy prices spiralling.