Inflation leaps to 4% stoking fears of fifth interest rate hike before Christmas
Summary
Inflation in Australia rose to 4% in the year to August, driven mainly by higher fuel prices and increased building costs. This rise has increased the chance that the Reserve Bank of Australia (RBA) will raise interest rates again before Christmas to try to control inflation.Key Facts
- Inflation increased from 3.5% to 4% in the year to August.
- Fuel prices went up by 15% last month due to higher global oil prices linked to the Middle East conflict.
- Building costs rose by 5.4% over the past year, pushing inflation higher.
- Electricity bills increased compared to last year, despite previous government rebates.
- The RBA recently raised its cash interest rate to 4.6%, the fourth increase this year.
- Underlying inflation, which removes volatile price changes, stayed steady at 3.6%.
- Economists believe another rate hike is likely before the end of the year.
- Government spending is high and may be adding to inflation but is not seen as the main cause.
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