Australia’s Inflation Rises to 4.3%, Raising Rate Hike Expectations
Australia’s annual inflation rate climbed to 4.3% in September, increasing expectations that the Reserve Bank of Australia (RBA) will raise interest rates at its upcoming meeting.
The Consumer Price Index (CPI) rose 0.8% during September, compared with 0.4% in August, according to the Australian Bureau of Statistics (ABS).
Housing was the largest contributor to annual inflation, increasing 5.2%. Transport costs also pushed prices higher, with fuel prices rising 9.4% during the month.
Underlying inflation, measured by the annual trimmed mean, increased to 3.6%, up from a revised 3.5% in August. The measure excludes unusually large price movements, including volatile fuel prices.
Following the latest figures, financial markets placed the likelihood of a 0.25 percentage point interest rate increase next week at around 85%.
KPMG Australia chief economist Brendan Rynne said the figures provided further evidence that inflationary pressures were strengthening, increasing the case for another rate rise.
Betashares chief economist David Bassanese also expects the RBA to raise rates next week, although he believes the bank could keep them unchanged in December.
RBA Deputy Governor Andrew Hauser said inflation remained too high, despite being broadly in line with the central bank’s expectations.
The RBA aims to keep inflation between 2% and 3%.
The latest figures also showed quarterly underlying inflation rose 1% in the September quarter, exceeding the RBA’s earlier forecast of 0.8%.
Economists said higher oil prices, rising service costs and increasing prices for imported goods were contributing to the renewed inflation pressure.
Health costs rose 3.7% over the year, while recreation prices increased 4.5%. Domestic holiday travel and accommodation rose 5.3%, while games, toys and hobbies increased 15.5%, partly due to higher memory and storage component costs linked to growing demand from the artificial intelligence industry.
The RBA’s interest rate-setting board will meet on Monday and announce its decision on Tuesday afternoon, alongside updated economic forecasts.
The latest inflation figures have strengthened expectations of another rate increase, which could add further pressure to Australian households already facing higher living costs and mortgage repayments.
Stay tuned with Aus News Lanka – the leading platform for news for Australians.
Source : ABC News
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