RBA Hints at Imminent Rate Hike Amid Rising Inflation Concerns

The Reserve Bank of Australia (RBA) is widely expected to raise interest rates within weeks due to concerns over high demand and inflation prospects. The bank's warning comes after new data revealed that the Consumer Price Index (CPI) rose 3.5% for the 12 months to July, which is skewed by electricity rebates and fuel cost changes.

Trimmed mean inflation, a more reliable measure of inflation used by the RBA, remains unchanged at 3.6% for a third consecutive month. This has led economists to believe that higher inflation may be becoming entrenched in Australia's economy, prompting the bank to act quickly.

RBA Governor Michele Bullock has reiterated that the door remains open for more hikes and that long-term high inflation will not be accepted. Several major lenders have revised their interest rate forecasts in response to the latest data, with ANZ and National Australia Bank expecting a rate hike as soon as September, while Commonwealth Bank predicts a rate hike for November.

Belinda Allen, CBA's head of Australian economics, warned that the bank was not ruling out an additional hike before Christmas. Housing costs continue to drive price gains, with new dwellings prices rising 5.7% in the 12 months to July due to higher materials and labor costs.