RBA Rate Hike Looms as Inflation Data Surpasses Expectations

The Reserve Bank of Australia (RBA) may consider another interest rate hike after inflation data for July showed a slight increase to 3.5 per cent, from 3.8 per cent in June.

The largest contributor to annual inflation was housing, which rose by 5 per cent, followed by food and non-alcoholic beverages, and recreation and culture.

Annually, transport prices increased 1.6 per cent in July, up from 0.1 per cent in the year to June. On a monthly basis, automotive fuel prices rose 7.5 per cent in July after falling for three months in a row.

Economists warn that these figures could warrant another rate hike, with AMP economist My Bui stating: 'If you annualise that number we get 3.6 [to] 3.8 per cent, so that's just way too far from the RBA's target [between 2.5 to 3 per cent].'

However, not all economists agree, with Callam Pickering, APAC economist at Indeed, saying: 'Demand exceeds supply and productivity growth is absolutely dreadful, that's not typically a recipe for low and stable inflation.'