Australia Inflation Rises More Than Expected in July

Australia's consumer prices rose more than expected in July, driven by higher fuel costs and core inflation.

The Australian Bureau of Statistics reported a 1% monthly increase in its consumer price index (CPI) from June, exceeding forecasts of a 0.8% rise. The annual pace slowed to 3.5% from 3.8%, countering expectations for a sharp slowdown to 3.3%.

Core inflation, measured by the trimmed mean, increased 0.5% in the month, the biggest increase in a year and well above forecasts for 0.3%. The annual pace of core inflation remained at 3.6%.

The Reserve Bank of Australia (RBA) held interest rates steady at 4.35% this month after three rate hikes this year aimed at taming inflation. Policymakers have warned that they would hike again if inflation risks build.

Analysts noted the surprises came from much higher prices across consumer goods and market services, with tradeable goods jumping 1.5% in the month and services inflation picking up by 0.7%. The RBA had forecast trimmed mean inflation to slow to 3.3% by the end of the year.