Inflation Jumps to 4% Amid Reserve Bank Rate Hike

Homeowners have suffered another blow as inflation surged in August, just a day after the Reserve Bank raised the cash rate to its highest level in 15 years. The consumer price index rose 4% in August, up from 3.5% in July, according to figures released by the Australian Bureau of Statistics on September 30.

The trimmed mean inflation rate held steady at 3.6%, but experts warn that this may not be a reliable indicator due to excluded goods and services. The Reserve Bank had raised the cash rate to 4.6% without knowing the full effects of its previous hikes, which were made without access to August's consumer price index.

Reserve Bank governor Michele Bullock acknowledged the timing was 'unfortunate', but said the bank would continue to raise rates as long as inflation remained above the target range of 2-3%. Westpac is now predicting another rate rise in November, while the Commonwealth Bank and NAB warn of a risk of further increases.

The largest drivers of inflation were housing (5.7% increase) and transport (5.6% increase), with rising costs for new dwellings, electricity, and fuel contributing to the surge. The Reserve Bank is set to continue its focus on controlling inflation, but experts warn that further rate hikes could exacerbate mortgage stress.