RBA Rate Hike Fails to Tame Inflation as CPI Figures Loom

The Reserve Bank of Australia (RBA) hiked interest rates to a 15-year high just one day before the release of the August Consumer Price Index (CPI) figures, which are expected to show inflation accelerating further.

Economists predict annual headline inflation will rise to around 4.0%-4.1%, up from 3.5% in July, with a result within this range pushing inflation above the RBA's 2%-3% target range.

The data arrives after the RBA increased the cash rate by 25 basis points to 4.60%, its fourth hike of 2026, citing elevated domestic inflation and growing pressure from higher global energy costs.

Westpac expects August CPI to increase about 0.4% over the month and 4.0% over the year, with higher petrol and other energy costs likely to play a significant role in driving inflation.