Australian July Consumer Price Index (CPI) Surprise Raises RBA Rate-Hike Odds

Australian consumer-price data for July showed a 1.0 % month-on-month rise, outpacing the 0.8 % forecast. The annual headline CPI eased to 3.5 % from 3.8 % in June, but still exceeded the Reuters median forecast of 3.3 %. Fuel prices jumped 7.5 % after three months of decline, while housing contributed a 5.0 % annual increase. Tradeable goods rose 1.5 % and services inflation added 0.7 %. The trimmed-mean (core) measure increased 0.5 % month-on-month—the largest gain in a year—leaving the annual trimmed-mean at 3.6 % for a third consecutive month.

Australia Inflation Eased to 3.5%. Why an RBA Rate Hike Is Still on the Table ReutersAustralia’s Inflation Surprise Puts The RBA Back On Alert Australia’s July CPI Set to Show Inflation Easing, Supporting RBA’s Cautious Stance ABC News Australia

The Australian dollar appreciated 0.3 % to US$0.7183, its highest level in 12 weeks, as bond futures slipped to 95.41. Traders now assign a 38 % probability to a September RBA hike, up from 17 %, and expect a rate increase by February 2027. ANZ, which had previously forecast a hold, is now projecting a quarter-point hike in November; National Australia Bank says its view is under review.

Reuters

ANZ’s head of Australian economics highlighted the upside risk to the RBA’s inflation outlook. The Reserve Bank’s minutes released after the data showed several board members deeming further tightening “quite possible” if upside risks materialise.

Reuters

• Monthly CPI: +1.0 % (forecast +0.8 %)

Australia Inflation Eased to 3.5%. Why an RBA Rate Hike Is Still on the Table

• Annual headline CPI: 3.5 % (forecast 3.3 %)

Australia Inflation Eased to 3.5%. Why an RBA Rate Hike Is Still on the Table

• Fuel price change: +7.5 % month-on-month

ABC News Australia

• Housing contribution: +5.0 % annual

Australia Inflation Eased to 3.5%. Why an RBA Rate Hike Is Still on the Table

• Tradeable goods: +1.5 % month-on-month

Reuters

• Services inflation: +0.7 % month-on-month

ABC News Australia

• Trimmed-mean monthly change: +0.5 % (largest in a year)

Australia Inflation Eased to 3.5%. Why an RBA Rate Hike Is Still on the Table

• Trimmed-mean annual: 3.6 % (steady for three months)

Australia Inflation Eased to 3.5%. Why an RBA Rate Hike Is Still on the Table

Forecasts varied across outlets. Reuters’ median expectation was 3.3 % annual CPI, while Bitcoinworld projected a 3.4 % rise. Both missed the actual 3.5 % print. Underlying inflation measures (trimmed mean) were reported as unchanged at 3.6 % by multiple sources, leaving no consensus on whether the upward surprise reflects a temporary shock or a more persistent trend.

Australia Inflation Eased to 3.5%. Why an RBA Rate Hike Is Still on the Table

• September 29, 2026: The Reserve Bank of Australia will announce its next cash-rate decision.

ABC News Australia

• September 30, 2026: The following monthly CPI report will be released, offering a near-term gauge of inflation momentum.

Australia’s July CPI Set to Show Inflation Easing, Supporting RBA’s Cautious Stance

• “The data suggest there is strong upside risk to the RBA’s near-term inflation forecast... The breadth and nature of the upside inflation surprise in July may also be a concern for the RBA,” — Adam Boyton, head of Australian economics at ANZ

Reuters

• “For the RBA to hike in September 2026, it would signal a deeper concern by the RBA they are ‘behind the curve’ and hence potentially open the door to multiple hikes ahead,” — Stephen Wu, an economist

Reuters