Australian Inflation Surpasses Expectations, Fueling Rate Hike Speculation
Australia's inflation rate exceeded expectations in July, driven by jumps in fuel and travel costs. The consumer price index (CPI) rose 1.0% from June, surpassing forecasts of an 0.8% increase.
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 July, its biggest rise in a year and above forecasts of 0.3%.
Deutsche Bank is now calling for a quarter-point rate hike from the Reserve Bank of Australia (RBA) in September due to fresh upside risks to inflation. The RBA held interest rates steady at 4.35% this month, but policymakers have warned that they would hike again if inflation risks build.
New dwelling prices jumped 5.7% in July from a year ago, slowing slightly from a 5.8% rise the previous month, while rent inflation remained at an elevated rate of 3.6%. The Australian dollar rose 0.2% to $0.7176 following the data.