RBA Rate Hike Vindicated as Inflation Remains Stubborn

The Reserve Bank of Australia (RBA) has been vindicated in its decision to raise interest rates, as the latest inflation data shows that prices are still rising. The annual consumer price index jumped to four per cent in August, driven by higher fuel prices due to the Middle East conflict.

However, the trimmed mean, a measure of underlying inflation preferred by the RBA, came in at 3.6 per cent for the third straight month, reinforcing concerns that inflation pressures are not easing. This result was slightly softer than economists had been expecting, but still validates the RBA's decision to hike interest rates.

KPMG chief economist Brendan Rynne said, 'Essentially today's data validates the RBA's decision yesterday to raise rates as it shows inflation is still far from under control, leaving the RBA with no choice but to act.'