Australia's Inflation Eases to 3.5%, RBA Rate Hike Risk Grows

Australia's annual inflation rate eased in July to 3.5% from 3.8% in June, but the latest figures have increased concerns that the Reserve Bank of Australia could raise interest rates again.

The Consumer Price Index rose 3.5 per cent in the 12 months to July, higher than the 3.3 per cent forecast by many economists.

Housing was the biggest contributor to inflation in July, with prices rising 5% over the year, driven in part by fuel prices which jumped 7.5% during the month.

Economists are now divided over what the central bank will do next, with some believing a September rate increase is possible while others expect the RBA to wait for additional information on employment and economic growth before making another move.