Business & Finance
Australian inflation falls to 3.5% in July, missing expectations and raising rate hike concerns
Underlying inflation remained at 3.6%, prompting economists to warn that the Reserve Bank of Australia could raise interest rates again.
The short version
- Australia's annual consumer price index slowed to 3.5% in July from 3.8% in June, but exceeded economist expectations of 3.3%.
- Underlying inflation held steady at 3.6%, driven by housing costs, restaurant prices, and the expiration of fuel excise relief.
- Economists from major financial institutions now warn that the Reserve Bank of Australia could raise interest rates as early as September or November.
Key facts
- Australia's consumer price index rose 3.5% in the year to July, down from 3.8% in June but higher than the forecasted 3.3%.[The Guardian]
- The Reserve Bank of Australia's preferred measure of underlying inflation remained unchanged at 3.6%.[The Guardian]
- The end of fuel excise relief contributed to a 7.5% rise in fuel prices during July.[The Guardian]
- Home construction costs rose 5.7% and rents grew 3.6% in the year to July, while takeaway and restaurant prices rose 4.5%.[The Guardian]
- The Reserve Bank of Australia kept its cash rate at 4.35% on August 11, though meeting minutes indicated board members considered a future rate hike possible.[The Guardian]
What remains uncertain
- The timing and necessity of a future interest rate increase remain uncertain, with predictions from economists ranging from September to November, while others are reviewing previous projections.[The Guardian]