Australia's Inflation Surges, Fueling Rate Hike Fears

Australia's consumer prices rose more than expected in July, driven by increases in fuel and travel costs. The data released on August 26 showed a 1% monthly increase in the country's Consumer Price Index (CPI), exceeding forecasts of a 0.8% rise.

The core inflation rate also exceeded expectations, with the trimmed mean measure increasing by 0.5% in August, the largest gain in a year. This has added to the risk of another interest rate hike from the Reserve Bank of Australia (RBA).

Market participants have increased their probability of a fourth rate hike from the RBA in September to 36%, up from 17%. A quarter-point rate hike is now being predicted by Deutsche Bank, citing fresh upside risks to inflation.