The rise in inflation in Australia for August was in line with predictions, and a measure of core inflation fell even more, which relieved some of the pressure on the country’s central bank to raise interest rates the following month.

Australia’s consumer price index (CPI) increased by 5.2% in the year leading up to August, accelerating from 4.9% the previous month and marking the first acceleration in the growth rate in the preceding four months. However, most of the increase may be attributed to a rise in gasoline costs due to global supply concerns.

A carefully monitored gauge of prices excluding volatile goods and holiday travel fell to 5.5% from 5.8% as the rate moved in the right direction.

“The downward trend in inflation saw a temporary setback in August… However, it is too soon to conclude that inflation is beginning to raise its ugly head again, according to Harry Murphy Cruise, an economist at Moody’s Analytics.

“Of sure, there are a good number of problematic areas… The ‘positive’ news, which is a rapidly declining goods inflation rate, is being hampered further by the continuing rise in inflation for services. Nevertheless, the advantages far exceed the disadvantages.”

Following the release of the data, the financial markets saw a modest rise in the likelihood of a rate pause being announced by the Reserve Bank of Australia the following month, moving from 87% to 92%. According to the market’s current price, an interest rate increase will not occur until May of the following year.

“We view the uptick in inflation in August as a temporary hump in the downward trend that has been in train since December of last year,” said Stephen Wu, an economist working for the Commonwealth Bank of Australia.

“We think that the RBA will be inclined to see it that way too when it meets next Tuesday for the October rate decision.”

However, some experts believe the central bank will raise interest rates one more before the end of the year, most likely in November, following the publication of the inflation report for the third quarter.

“I think there is a decent chance that we’re going to get something from the RBA maybe in November or December,” said Rob Carnell, the head of research for Asia-Pacific at ING. “Once we get the next couple of months’ inflation numbers through,” he said, “I think there is a decent chance that we’re going to get something from the RBA maybe in November or December.”

Since May of last year, the RBA has increased interest rates by 400 basis points, bringing them to a level that is 4.1% higher than they were before and warning that future rate increases may be necessary to limit inflation.

The fuel price was a major contributor to inflation last month, climbing 13.9% year over year, the largest annual increase seen since November 2022. The fact that prices for international oil have reached their highest point in two months indicates that they will continue to rise during this month.

Although government rebates mitigated monthly gains, yearly price increases for electricity remained steady at 12.7%, indicating ongoing rapid growth.

Regarding services, insurance premiums went up 8.8%, which is an increase from 8.5% the month before, while rent inflation went up 7.8%, which is an increase from 7.6%.

The Consumer Price Index (CPI) increased by 0.6% every month in August, which was an acceleration from the 0.3% gain seen in July.

The value of the Australian dollar remained relatively unchanged at around 64 cents, and the yield on the three-year government bond decreased by three basis points to reach 4.029%.