Australia’s inflation surge prompts renewed focus on potential RBA interest rate hike as pressures persist
Australia’s inflation rebound is putting fresh pressure on the Reserve Bank of Australia (RBA), with the latest figures strengthening the case for another interest rate rise.
Consumer prices climbed 1.3% in the September quarter, more than double the 0.6% increase recorded in the previous quarter, according to the Australian Bureau of Statistics.
Annual headline inflation came in at 3.9%, in line with market expectations.
Inflation concerns
Underlying inflation is also proving difficult to contain. The RBA’s preferred measure, trimmed mean inflation, rose 1% over the quarter, above the central bank’s implied forecast of 0.8%.
On an annual basis, trimmed mean inflation accelerated to 3.7%, exceeding expectations of 3.6% and remaining well above the RBA’s 2% to 3% target range.
Headline inflation climbed to 4.3% in September, up from 4% in August, with housing and transport costs contributing to the increase.
The latest figures follow the RBA’s September decision to lift the cash rate by 25 basis points to 4.60%, as persistent inflation and rising oil prices continued to complicate the economic outlook.
With price pressures showing few signs of easing, the prospect of another rate increase is gaining attention ahead of the central bank’s November 2 and 3 meeting.
RBA Deputy Governor Andrew Hauser has also warned that the inflation outlook has deteriorated materially, highlighting the challenge of bringing prices under control without putting further strain on economic growth.
For households and businesses already grappling with higher living and operating costs, another rate rise could mean further pressure, with hopes of interest rate relief potentially pushed further down the track.
