Rising Inflation Pushes RBA Towards Fifth Rate Hike This Year

Inflation has hit a four-month high in Australia, reaching 4% in August. This increase in inflation puts pressure on the Reserve Bank of Australia (RBA) to raise interest rates for the fifth time this year.

The consumer price index rose sharply from July's 3.5% level, with automotive fuel prices surging by 13.5% over the year and increasing by 14.8% in August alone.

Goods inflation increased by 4.2%, while services inflation went up by 3.7%. The overall annual headline inflation has been above the RBA's target range of 2-3% for the 13th straight month, making another rate hike more likely.

KPMG chief economist Brendan Rynne said that today's data validates the RBA's decision to raise rates yesterday, as it shows inflation is still far from under control. EY senior economist Paula Gadsby also expects another rate hike by the end of the year if inflation momentum fails to moderate.