Inflation rises to 3.6%, creating new pressure for RBA
- 53 minutes ago
- 1 min read
Australians could face further mortgage pressure after new inflation data showed price growth remains higher than expected.
The Australian Bureau of Statistics reported annual inflation slowed to 4 per cent in May. However, underlying inflation closely watched by the Reserve Bank of Australia (RBA) increased to 3.6 per cent, remaining above the RBA’s 2–3 per cent target range.
Economists had expected underlying inflation to rise to around 3.5 per cent, meaning the higher result has created fresh challenges for the central bank as it works to control rising prices.
Markets are now pricing in a chance of another interest rate increase at the RBA’s August meeting.
Housing was the biggest driver of inflation, with costs rising 6.5 per cent over the year. Higher electricity prices, rents and new home costs contributed to the increase after government energy rebates ended.
Food and transport costs also increased by 3.3 per cent, while fuel prices rose 7.7 per cent compared with a year earlier although the increase was smaller than previous months.
Economists warned the RBA cannot yet declare inflation under control, with some expecting another rate rise before the end of the year.
Treasurer Jim Chalmers said the government’s fuel excise cut helped ease some pressure on households, but acknowledged global issues continue to affect prices.
The latest figures come after the RBA raised interest rates three times in 2026, with its June decision marking the first pause of the year.
Source : Sky News
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