Inflation Hits Four-Month High as Westpac Predicts Another Rate Hike

Inflation in Australia has reached a four-month high of 4% in August, according to data released by the Australian Bureau of Statistics (ABS). This marks a significant increase from the previous month and follows the Reserve Bank's decision to lift the cash rate to 4.6%.

The main contributors to this rise were housing costs, which surged 5.7% over the year, driven by higher prices for new dwellings and electricity. Petrol prices also jumped 14.8% in August alone, with global oil prices and the end of the federal government's fuel excise relief contributing to the increase.

Treasurer Jim Chalmers attributed the rise in headline inflation to higher global oil prices, stating that all of the increase was due to a combination of higher fuel costs and the unwinding of last year's energy rebates.

Despite this, Westpac has made a November rate hike its most likely scenario, with chief economist Luci Ellis saying that the bar for another follow-up hike is low. However, financial markets seem less convinced, with the Australian dollar falling slightly after the figures were released.