Australia's Inflation Rate Accelerates Amid Rising Fuel Costs

Australia's consumer inflation rate accelerated in August from a year earlier due to rising fuel costs. The Reserve Bank of Australia (RBA) had already raised interest rates to 4.6%, the highest level in 15 years, and warned that further hikes may be necessary.

The Australian Bureau of Statistics reported that its monthly consumer price index rose 0.4% in August from July, while the annual pace accelerated to 4.0% from 3.5%. This is despite forecasts for a 0.5% gain and shows little impact from the four rate hikes aimed at cooling demand.

The inflation results were slightly less than expected, causing the Australian dollar to slip 0.3% to $0.6964 and 3-year government bond futures to rally 8 basis points to 95.10. The risk of a November hike was also pared back to just 20% from 35% previously.