Australian Inflation Remains High Despite Rate Hikes

Australia's inflation rate remained stubbornly high in August, despite a series of interest rate hikes this year. The country's consumer price index rose by 0.4% in August from July, with fuel costs surging 14.8% due to higher oil prices and the unwinding of government tax relief.

The annual inflation pace increased to 4.0%, well above the Reserve Bank of Australia's (RBA) target band of 2% to 3%. The RBA has already raised interest rates to a 15-year high of 4.6% this year, with Governor Michele Bullock warning that further hikes may be necessary if inflation remains high.

The trimmed mean measure of core inflation increased by 0.2% in the month, leaving the annual pace steady at 3.6%. Oxford Economics Australia's Harry McAuley expects oil prices above $100 per barrel to present upside risks for another hike in 2027.