Inflation Hits Two-Year High as Housing Costs Surge

The Reserve Bank of Australia's (RBA) preferred measure of inflation has reached its highest point in almost two years, exceeding expectations. The Australian Bureau of Statistics reported that trimmed mean inflation sat at 3.6 per cent for the second month in a row, with major contributors being housing and food prices.

Housing costs surged five per cent, driven by new dwelling prices rising 5.7 per cent in the 12 months to July as builders passed on higher costs for materials and labour. Food and non-alcoholic beverages also lifted 3.2 per cent.

ABS head of price statistics Rachael McCririck attributed the increase in housing inflation to the rising costs of new dwellings, saying 'New dwellings prices rose 5.7 per cent in the 12 months to July as builders passed on higher costs for materials and labour.'

VanEck head of investments and capital markets Russel Chesler stated that this result means there will be at least one more rate hike this year, saying 'The inflation fight is far from won.' He also warned that inflation is becoming entrenched and has little chance of returning to the RBA's target range by late 2027.