Australian Inflation Surges, Boosting Rate Hike Odds

Australia's consumer prices rose more than expected in July, driven by higher fuel and travel costs. The Australian Bureau of Statistics reported that the monthly consumer price index (CPI) increased by 1.0% from June, exceeding forecasts of a 0.8% rise.

The annual pace slowed to 3.5%, countering expectations for a sharp slowdown to 3.3%. Core inflation, measured by the trimmed mean, rose 0.5% in the month, its largest increase in a year and well above forecasts of 0.3%. This leaves the annual core inflation rate at 3.6%.

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