Australia’s consumer price inflation remained stubbornly high in July, with the consumer price index increasing 3.5% from a year earlier, exceeding market forecasts of 3.3% and up from 3.8% in June.
The monthly measure rose 1.0%, also above the 0.8% estimate, while the RBA’s preferred trimmed mean gauge held at 3.6% year-on-year, unchanged from June and above the 3.5% expectation. Automotive fuel prices climbed 7.5% in July, reversing three consecutive monthly declines as global oil prices rose and federal fuel-excise relief was partially unwound, according to the Australian Bureau of Statistics.
The Reserve Bank of Australia left its cash rate unchanged at 4.35% at its August meeting, but minutes released the following day showed policymakers discussed a 25-basis-point increase. Traders increased bets on a September hike, with rate-futures pricing a 27% probability, up from 17% previously. Markets now price an 80% chance of a rate hike by February 2027.
The Australian dollar strengthened about 0.2% against the U.S. dollar following the data, while the S&P/ASX 200 index rose roughly 0.2%, reaching its highest level in two weeks. The RBA had previously forecast trimmed mean inflation to ease to 3.3% by the end of 2026.
