Australia's July inflation exceeds expectations, may prompt central bank to raise rates
Macro
Australia's Bureau of Statistics reported today that the Consumer Price Index (CPI) rose 1.0% month-on-month in July, higher than the 0.8% expected by analysts, due to a 7.5% rebound in fuel prices after three consecutive months of decline. On an annual basis, CPI stood at 3.5%, slowing from 3.8% in June but still above the 3.3% forecast. The core CPI index rose 0.5% in July, the largest increase in a year, and above the 0.3% expected, bringing the annual core CPI to 3.6%. The higher-than-expected inflation figures could push the Reserve Bank of Australia (RBA) to raise interest rates. Investors have increased the probability of an RBA rate hike at the September meeting to 27% from 17%, and to 80% for February next year. The RBA is also closely watching the second-quarter GDP data due next week, particularly the rising investment in data centers.
