Inflation unexpectedly surges to 2.8 per cent
The consumer price index unexpectedly surged 2.8 per cent in July, driven by a jump in housing, food and alcohol costs.
Inflation has skyrocketed to 2.8 per cent, shocking economists and rising above the midpoint of the Reserve Bank’s two to three per cent target band.
The jump from 1.9 per cent in June was well above the expectations of analysts, who predicted the annual figure to climb to 2.3 per cent in figures released by the Australian Bureau of Statistics on Wednesday.
“This is the highest annual inflation rate since July 2024, following several months of easing inflation,” said ABS head of prices statistics Michelle Marquardt.
The annual trimmed mean, which removes volatile items, rose from 2.1 per cent to 2.7 per cent.
The surge was driven by the housing, food and alcohol and tobacco categories.
Electricity prices rose 13 per cent in July as government energy relief payments rolled off.
Holiday travel and accommodation prices also rose strongly.
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While the jump in the monthly figure will be unwelcome news to the RBA ahead of its upcoming meeting in late September, the board is more concerned by the more comprehensive quarterly inflation series, which will not be released next until October.
The ABS is working on upgrading the monthly indicator by November to cover a comprehensive range of prices in the economy, but for now it provides an incomplete snapshot.
The Westpac-Melbourne Institute leading index, which draws on a range of domestic and international data points to paint a picture of future economic growth, ticked up slightly in July but still points to sluggish growth in coming months.
“The recovery that started to take shape in last year continues to proceed slowly,” said Matt Hassan, Westpac Economics head of Australian macro-forecasting.
