Inflation in Australia has soared, raising fears of higher interest rates for borrowers.
The monthly indicator shows the consumer price index rose 4 percent in the year to May, compared with 3.6 percent in April.
Headline inflation is now further above the Reserve Bank’s 2 to 3 percent target and at its highest level in six months.
The bad news came just a week after RBA Governor Michele Bullock confirmed that a rate hike was more likely than a rate cut, with the cash rate unchanged this month at a 12-year high of 4.35 percent.
“Yes, the board discussed the arguments for raising interest rates during this meeting,” she told reporters.
‘No, no cuts have been considered.’
Inflation levels in Australia have soared, raising fears of more interest rate pain for borrowers
The monthly inflation measure is now back at its highest level since November 2023, when the Reserve Bank last raised interest rates.
Australian Bureau of Statistics data released on Wednesday shows petrol prices rose 9.3 per cent over the year, ahead of insurance and financial services’ 7.8 per cent.
But tobacco saw the largest increase of 13.4 percent.
The Commonwealth Bank, Westpac and NAB still expect a rate cut in November, but ANZ expects relief to be delayed until February 2025.