Expectations grow for interest rate hike next week after Australia’s inflation jumps to 3.8% | Interest rates
Inflation jumped to 3.8% in December from 3.4% in the previous month, as strong underlying price growth raised the prospect of a central bank rate hike on Tuesday.
Latest figures from the Australian Bureau of Statistics show Australian households are once again facing a struggle to regain control of skyrocketing consumer prices.
This fight will most likely start with a rate hike for the first time since November 2023 at next week’s RBA monetary policy board meeting.
Rising housing costs in the year to December, including a 3.9 percent increase in rents and a 21.5 percent increase in electricity prices as electricity bill subsidies were removed, helped push up the unexpectedly high annual inflation figure.
As Australians go on holiday, there has been an increase of around 10% in holiday and accommodation prices.
While the latest headline inflation figures are well above the RBA’s 2-3% target range, they have risen temporarily as the government’s electricity subsidies end.
Eliminating more extreme price movements and the shortened three-month average measure preferred by the central bank rose to 3.4% for the year from 3% in the September quarter.
The Australian Dollar rebounded above 70 cents on Tuesday following the release of ABS data, reflecting the increased likelihood of a rate hike.
Before the Australian Bureau of Statistics figures were released this morning, financial markets were predicting a 60% chance of a rate hike next week.
