Inflation has risen 0.2 per cent in the 12 months to August, according to fresh data from the Australian Bureau of Statistics.<\/p>\n
The ABS’ monthly CPI data showed the annual rate rose to 3 per cent in August, up from 2.8 per cent, marking the “highest annual inflation rate since July 2020”, according to head of prices statistics Michelle Marquardt.<\/p>\n
The largest contributors were housing which rose by 4.5 per cent, with food and non-alcoholic beverage prices increasing by 3 per cent, and Alcohol and tobacco rising by 6 per cent.<\/p>\n
Electricity prices rose by a mammoth 24.6 per cent in the 12 months to August, with the large increase primarily due to state and federal governments energy rebates being phased out and redacted.<\/p>\n
Rising electricity costs are also behind surging housing inflation.<\/p>\n
“The annual rise in electricity costs is primarily related to households in Queensland, Western Australia and Tasmania having higher out-of-pocket costs in August 2025 than they did in August 2024,” Ms Marquardt.<\/p>\n
Inflation has now almost creeped beyond the Reserve Bank of Australia\u2019s target band of between two and three per cent.<\/p>\n
Wednesday\u2019s inflation data comes ahead of next week\u2019s interest rate call where the Reserve Bank of Australia is widely expected to hold the cast rate.<\/p>\n
Prior to the release of Wednesday\u2019s data, economists were expecting August inflation to come in at 2.9 per cent year-on-year, up from 2.8 per cent in July.<\/p>\n
Sky News Business Reporter Ingrid Willinge said the latest data would all but certainly dissuade the Reserve Bank from cutting rates next week.<\/p>\n
“Certainly a rate cut for September \u2026 does look off the table for now particularly given we have seen continued tick up in this CPI,” she said.<\/p>\n
AMP Chief Economist Shane Oliver said while the central bank would not cut the cash rate – currently sitting at 3.6 per cent – it was not the market expectation.<\/p>\n
“Yes the reserve bank is not going to be cutting rates in September but that wasn\u2019t the market expectation anyway,” Mr Oliver told Sky News Australia on Wednesday.<\/p>\n
“I think they\u2019re moving in a gradual quarterly pace. They will wait until November and these numbers are consistent with the Reserve continuing to cut rates at a gradual pace.”<\/p>\n