Inflation rose by 5.2 per cent in the 12 months to August, according to the latest monthly consumer price index (CPI) indicator released by the Australian Bureau of Statistics (ABS).
The rate of inflation was up from 4.9 per cent in July, marking the first acceleration in the monthly CPI indicator since April. The 5.2 per cent lift was in line with market expectations.
The ABS reported that the most significant contributors to the increase in August were housing (+6.6 per cent), transport (+7.4 per cent), food and non-alcoholic beverages (+4.4 per cent), and insurance and financial services (+8.8 per cent).
Automotive fuel prices jumped by 13.9 per cent in the 12 months to August, the largest annual movement since November last year. In monthly terms, the ABS said that fuel prices rose by 9.1 per cent in August following a 0.2 per cent fall in July.
“The annual movement for automotive fuel remains volatile, partly reflecting price changes from 12 months ago, when automotive fuel prices fell 11.5 per cent in August 2022,” commented ABS head of prices statistics Michelle Marquardt.
“Price rises this month, combined with base effects, have seen the annual movement for automotive fuel increase 13.9 per cent in August, compared to a fall of 7.6 per cent in July.”
According to the central bank, the argument to raise the cash rate by a further 25 basis points in September hinged on the recent increase in petrol prices, which is a key input for households’ inflation expectations.
“Fuel prices had increased sharply in August. By itself, this would boost headline inflation in the September quarter, relative to expectations in early August,” the RBA said, but decided at the time that inflation was still expected to continue to moderate.
Ahead of the data release, NAB economist Taylor Nugent noted that the latest figures on services inflation would be “very important” for whether the RBA elects to hike again.
Mr Nugent noted that the September print is important for the near-term outlook for interest rates since the mid-month of the quarter has better coverage of services inflation.
“Signs of elevated services inflation would indicate upside risk to the RBA’s Q3 trimmed mean inflation forecasts is being realised, and in our view would lean to the RBA lifting rates again in November,” he suggested.