Australia inflation shock as CPI spikes in grim cost of living signal for millions of Australian homeowners
- Inflation rose by 5.2 per cent in August
- Petrol prices surged by 13.9 per cent
Australian home borrower are now being warned to expect another rate by Christmas with inflation rising to 5.2 per cent in an ominous sign the cost of living crisis is far from over.
The official monthly reading for August showed the consumer price index edging up from July’s 4.9 per cent level, with petrol prices last month surging by almost 14 per cent.
This also marked the first monthly deterioration in the annual headline inflation rate since April, with the monthly CPI in August worsening for only the second time since it peaked at a 32-year high of 8.4 per cent in December 2022.
Consumers are copping double-digit price increases for bread and cereal, along with gas and electricity bills.
AMP deputy chief economist Diana Mousina said the bad inflation result, following more generous enterprise bargaining pay rises, could now see the Reserve Bank increase interest rates by Christmas.
‘Upside wage risks does increase the risk of another rate rise before the end of the year, with the most likely timing for another rate rise in December,’ she said.
Australia’s inflation rate has risen to 5.2 per cent in an ominous sign the cost of living crisis is far from over after several months of easing consumer pressure (pictured is a Sydney service station)
The official monthly reading for August showed the consumer price index edging up from July’s 4.9 per cent level, with petrol prices last month surging by almost 14 per cent. Basic E10 Unleaded petrol is now typically selling for more than $2.20 a litre in parts of Sydney (pictured) and Melbourne
This is bad news for home borrowers hoping for an interest rate cut soon – following 12 increases since May 2022 – because overall inflation is now further away from the Reserve Bank’s two to three per cent target.
Petrol prices are going up again, with automotive fuel posting the biggest increase of 13.9 per cent in August, marking a huge turnaround from July’s 7.6 per cent fall and June’s 10.6 per cent plunge.
Basic E10 Unleaded petrol is now typically selling for more than $2.20 a litre in parts of Sydney and Melbourne.
Bread and cereal prices also went up by double-digit figures, rising by 10.4 per cent as dairy products went up by 10.1 per cent.
Utility bills are also particularly unpleasant with electricity prices up 12.7 per cent and gas prices surging by 12.9 per cent.
This is bad news for home borrowers hoping for an interest rate cut soon – following 12 increases since May 2022 – because overall inflation is now further away from the Reserve Bank’s two to three per cent target (pictured is a Sydney auction)
Insurance and financial services costs increased by 8.8 per cent as holiday travel and accommodation expenses went up by 6.6 per cent.
Rents are also rising beyond the overall inflation rate, going up by 7.8 per cent in August.
The Australian Bureau of Statistics data was released on Wednesday as the futures market predicted no rates cuts in 2024 or early 2025.
This would be disappointing for home borrowers who have faced the most aggressive pace of monetary policy tightening since 1989 and seen their monthly mortgage repayments surge by 64 per cent in little more than a year.
But the data showed some small signs of relief, with meat and seafood prices rising by just 2.6 per cent over the year as fruit and vegetable prices dived by 8.3 per cent.