Australia's Inflation Rate Surges, Fueling Hike Speculation

Australia's inflation rate rose more than expected in July, with consumer prices increasing by 3.5% year-over-year, according to data released on August 26.

The monthly Consumer Price Index (CPI) rose 1.0% from June, exceeding forecasts of a 0.8% rise, as fuel prices jumped 7.5% after falling for three months.

The trimmed mean measure of core inflation increased 0.5% in the month, the biggest increase in a year and well above forecasts for 0.3%, leaving the annual pace at 3.6%.

The hot data has added to the risk of another interest rate hike by the Reserve Bank of Australia (RBA) this year, with markets repricing the risk of a fourth rate hike in September from just 17% before to 38% now.