Inflation jumps to four-month high a day after RBA rate rise
Australia’s inflation rate has jumped to a four-month high, increasing the chances the Reserve Bank will lift interest rates again this year.
The consumer price index climbed from 3.5 per cent in July to 4 per cent in August driven by higher housing-related costs and elevated petrol prices.
The inflation increase comes a day after the Reserve Bank lifted official interest rates to a 15-year high of 4.6 per cent in a bid to dampen inflationary pressures in the economy. It was the fourth interest rate rise this year and the bank warned it would lift rates “further if needed” to bring price growth under control.
The Bureau of Statistics said housing was the largest contributor to annual inflation in August, rising by 5.7 per cent.
Transport was the second-largest contributor to annual inflation in August, rising by 5.6 per cent due to higher automotive fuel prices.
The underlying rate of inflation, a key guide to the future of interest rates, was unchanged at 3.6 per cent.
The inflation rate last peaked at 4.6 per cent in March but had eased to 3.5 per cent by July.
The Reserve Bank’s monetary policy board, which sets official interest rates, will meet again in early November to consider any change.
Following the rate increase Reserve Bank governor Michele Bullock said that excess demand in the economy has to slow to get inflation down sustainably.
During a testy press conference in Melbourne on Wednesday morning, Prime Minister Anthony Albanese rebuked journalists for asking about the impact of government spending on inflation.
While a journalist was halfway through her question about Labor’s spending, the prime minister cut in to say: “There’s a question in there somewhere.”
He then said his government had taken every possible opportunity to make savings, and that the Coalition had opposed every attempt the government had made to cut spending bar one.
“We’ve had $178 billion dollars of savings. And indeed, the only savings that the Coalition have supported … is on the NDIS, and that they delayed for months to play politics along with the Greens in the Senate,” Albanese told reporters.
“Angus Taylor has a question that he has to answer, which is how can you promise $110 billion dollars of new spend, which he has? How can you oppose every saving which has been put forward, which he has?”
The prime minister also insisted there was no contradictory messaging between RBA governor Michele Bullock and Treasurer Jim Chalmers on the reason for Australia’s above-target inflation rate.
With Emily Kaine
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