Triple Threat: Rising Rates, Inflation, and Petrol Prices Loom for Australia

Australia's economy may be facing a perfect storm of rising interest rates, higher inflation, and surging petrol prices. The country's unemployment rate has held steady at 4.4% after adding 76,000 jobs in June, but this positive news for the labor market could have devastating consequences for mortgage holders.

The chance of the Reserve Bank of Australia (RBA) hiking the cash rate at its next meeting in August jumped from 20 to 35%, according to financial markets. AMP's deputy chief economist Diana Mousina expects another 0.25% rate hike, which would take the cash rate to 4.6%. However, CBA economist Trent Saunders forecasts a rate hold in August.

The RBA's decision may come with two additional financial blows to Australians: higher petrol prices and inflation. Global oil prices have climbed back above $US100 per barrel following attacks on Saudi oil tankers, pushing oil prices up by about 35% since June. The expiry of the federal fuel excise in early August could also lead to price surges for petrol and diesel.