The Australian Bureau of Statistics reported that the Consumer Price Index accelerated to 4.0% in August year-on-year, up from 3.5% in July, but still below the 4.1% analysts had expected. On a monthly basis, the headline CPI rose 0.4%, while the seasonally adjusted CPI rose 0.7%. The core CPI, the measure the Reserve Bank of Australia watches closely, stood at 3.6% year-on-year, in line with expectations and unchanged from July. Higher fuel costs remained the main driver, with automotive fuel prices jumping 14.8% in August compared with July amid higher global crude oil prices, pushing transport inflation to 5.6% year-on-year. Housing inflation accelerated to 5.7% from 5.0% in July, with newly built home prices up 5.4%, electricity prices surging 13.2% after government subsidies ended, and rents up 3.6%. The data was released just one day after the Reserve Bank of Australia raised interest rates by 0.25% to 4.6%, a 15-year high and the fourth increase this year. The RBA board said inflation remains too high, driven by domestic price pressures and higher energy prices stemming from the war with Iran.
CPI accelerated to 4.0% and the RBA hiked to a 15-year high of 4.6%, pushing Australian bond yields up.
RBA rate hike to 4.6% and sticky 4% inflation support the Australian dollar via higher yields.
