Reserve Bank Rate Hike Compounded by Surprise Inflation Surge

Homeowners have been dealt another blow as inflation surged in August, rising to 4% from 3.5% in July, according to figures released by the Australian Bureau of Statistics on September 30.

The Reserve Bank raised the cash rate to 4.6%, the highest it has been in 15 years, just a day before this increase in inflation was announced, with governor Michele Bullock conceding that the timing was 'unfortunate'.

Trimmed mean inflation, which excludes the top and bottom 15% of goods and services, remained steady at 3.6%, but housing costs continued to drive inflation, rising 5.7% in the past year due to increased prices for new dwellings and electricity.

The Reserve Bank has been clear that it will continue to raise interest rates until inflation returns to its target range of between 2% and 3%, with Westpac predicting another rise in November.