Australian inflation in July and August surges at the fastest pace since 1990
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Borrowers WILL absorb another big rate hike next month as inflation rises at its fastest pace since 1990
- Inflation rose 7 percent year-on-year to July and 6.8 percent year-on-year in August
- This was the highest annual inflation rate since December 1990
- As a result, there is a good chance that the Reserve Bank of Australia will raise interest rates in October
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Australian borrowers will face another major rate hike, with inflation rising at the fastest pace since 1990.
New data from the Australian Bureau of Statistics shows that the consumer price index rose by 7 percent in the period to July and by 6.8 percent per year in August.
This was the highest rate of headline inflation since December 1990 during the first Gulf War, with housing construction costs rising 20.7 percent last month over the course of the year, while gasoline prices rose 15 percent despite a temporary halving in inflation. fuel tax.
Inflation is well above the Reserve Bank of Australia’s target of 2 to 3 percent, meaning borrowers are more likely to face another major rate hike of 0.5 percentage points in October.
Borrowers since May have endured five consecutive monthly rate hikes, pushing the cash interest rate to a seven-year high of 2.35 percent.
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Australian borrowers will face another major rate hike, with inflation rising at the fastest pace since 1990 (Pictured is an auction in Melbourne)
Another 50 basis point hike next month would push the spot rate to its nine-year high of 2.85 percent.
Borrowers have endured the heaviest rate hikes since 1994 in just five months, but another 50 basis point hike would mean Australians would endure the most severe pace of monetary tightening since the RBA began publishing a target cash rate in 1990. .
The latest inflation data is the ABS’s first monthly release after Reserve Bank governor Philip Lowe was laughed at at a conference in Zurich in June for telling fellow central bankers that Australia still only has three-monthly data. on the consumer price index.
“The other thing that’s different — and this is a big difference — is that our CPI is only available quarterly,” said Dr. Lowe then.
“Yes, you laugh too.”
The United States, the UK and Canada release monthly inflation data, but Australia had only released quarterly inflation data until Thursday.
Inflation is well above the Reserve Bank of Australia’s target of 2 to 3 percent, meaning borrowers are more likely to face another major 0.5 percentage point rate hike in October (pictured is RBA Governor Philip Lowe)
Australia’s quarterly ABS series dates back to 1949.
But from October 26, in addition to inflation data for the September quarter, a monthly consumer price indicator will also be released.
The Reserve Bank and Treasury both expect headline inflation, also known as the consumer price index, to reach a 32-year high of 7.75 percent in 2022.
A series of tariff hikes have so far not deterred consumer spending, with retail sales rising 0.6 percent in August – the eighth consecutive monthly increase.
Headline inflation is at its highest level since December 1990 during the first Gulf War, with housing construction costs rising 20.7 percent last month over the course of the year, while gasoline prices rose 15 percent despite a temporary fuel tax cut in half. (shown is a Melbourne house under construction)