+34The Reserve Bank lifted official interest rates to 4.6 per cent, a 15-year high, as consumer price inflation rose from 3.5 per cent in July to 4 per cent in August, driven by housing and transport costs.
The Reserve Bank has lifted official interest rates to a 15-year high of 4.6 per cent in a bid to dampen inflationary pressures in the economy.
It was the fourth interest rate rise this year and the bank warned it would lift rates further if needed to bring price growth under control. The decision came as new data showed the consumer price index climbed from 3.5 per cent in July to 4 per cent in August. The increase was driven by higher housing-related costs and elevated petrol prices.
Housing Costs Drive August Inflation Rise
The Bureau of Statistics said housing was the largest contributor to annual inflation in August, rising by 5.7 per cent. Transport was the second-largest contributor to annual inflation in August, rising by 5.6 per cent due to higher automotive fuel prices. The underlying rate of inflation, a key guide to the future of interest rates, was unchanged at 3.6 per cent.
The inflation rate last peaked at 4.6 per cent in March but had eased to 3.5 per cent by July. The Reserve Bank monetary policy board, which sets official interest rates, will meet again in early November to consider any change. Following the rate increase, Reserve Bank governor Michele Bullock said that excess demand in the economy has to slow to get inflation down sustainably. The rate rise adds pressure on borrowers as inflation remains above target.
The political debate over the causes of inflation has intensified, with Labor and the Coalition blaming different forces for the decision. During a testy press conference in Melbourne on Wednesday morning, Prime Minister Anthony Albanese rebuked journalists for asking about the impact of government spending on inflation. While a journalist was halfway through her question about Labor spending, the prime minister cut in to say: There is a question in there somewhere.
Albanese Defends Government Savings Record
He then said his government had taken every possible opportunity to make savings, and that the Coalition had opposed every attempt the government had made to cut spending bar one. We have had 178 billion dollars of savings. And indeed, the only savings that the Coalition have supported is on the NDIS, and that they delayed for months to play politics along with the Greens in the Senate, Albanese told reporters.
Angus Taylor has a question that he has to answer, which is how can you promise 110 billion dollars of new spend, which he has? How can you oppose every saving which has been put forward, which he has? the prime minister said. He also insisted there was no contradictory messaging between Bullock and Treasurer Jim Chalmers on the reason for Australia above-target inflation rate. The clash centres on whether inflation is being driven by global factors or government spending.
Conflict Impact on Mortgage Holders Debated
The Middle East conflict, fuel prices and domestic capacity pressures all feature in the debate. The latest rate rise raises questions about what it could mean for mortgage holders, and why the possibility of further hikes remains in focus. The Reserve Bank has signalled it will act further if needed to bring price growth under control.
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smh:Inflation jumps to four-month high a day after RBA rate riseThis story was compiled and edited by the HeadTopics newsroom and HT AI from the reports above.
Inflation Australia Michele Bullock Anthony Albanese Cost Of Living Reserve Bank Of Australia Interest Rates Inflation Consumer Price Index Housing Costs
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