Australia's annual inflation rate rose to its highest level in 12 months in August, with headline inflation climbing to 3%, dashing expectations of an interest rate cut this month.
Official data released Wednesday showed the monthly consumer price index (CPI) exceeded forecasts after headline inflation had reached 2.8% in the 12 months to July.
However, trimmed mean annual inflation, the Reserve Bank of Australia's (RBA) preferred gauge of core inflation, eased slightly to 2.6% in August from 2.7% the previous month.
The RBA had anticipated a sharp pickup in inflation following the expiry of federal government electricity rebates, which left households paying the full cost of energy bills.
Michelle Marquardt, head of prices statistics at the Australian Bureau of Statistics, said the annual increase in electricity costs was mainly driven by higher living expenses faced by households in Queensland, Western Australia and Tasmania in August 2025 compared with the same month in 2024.
The inflation data, combined with last week's labor market report showing continued tightness in employment conditions, is expected to prompt the RBA's monetary policy board to keep its policy settings unchanged at its next meeting, maintaining a cautious stance on interest rates.
