RBA on Notice as Inflation Figures Exceed Expectations

The Reserve Bank of Australia (RBA) has been put on notice after receiving critical inflation figures. The Australian Bureau of Statistics reported that headline inflation had jumped to 4% for the 12 months until August, up from 3.5% in July.

Additionally, the trimmed mean inflation rate, which cuts out volatile and seasonal items, came in at 3.6% over the year to August. Economists warn that this rate staying above the 2-3% target will worry the RBA, indicating an inflation problem that is not just due to the Middle East war and rising fuel costs.

Rising housing prices were the largest contributor to the increase, up 5.7% over the year, while higher oil prices also contributed heavily, pushing the cost of transport up 5.6%. The RBA largely uses trimmed mean inflation to guide its monetary policy decisions.

Deloitte Access Economics partner Stephen Smith said that the inflation figures shorten the odds of a rate hike on Melbourne Cup Day, making it difficult for Australian households. VanEck head of investments and capital markets Russel Chesler warned that Tuesday's rate hike would not be enough to tame inflation, and that a December rate hike is becoming increasingly likely.