Australian inflation rose faster than expected in July, lifting expectations for further Reserve Bank of Australia tightening.
The Australian Dollar rose 0.2% to 0.7185 against the USD in European trading after July’s Consumer Price Index exceeded forecasts. Headline CPI climbed 1.0% month-over-month, above the 0.9% consensus, while annual inflation eased less than expected to 3.5% from 3.8% in June.
Underlying inflation remained firm, with trimmed mean CPI holding at 3.6% for a second consecutive month, defying expectations of a slight decline. The data reinforced market pricing for additional RBA rate hikes, supporting the AUD’s outperformance against major currencies.
Analysts noted the inflation surprise was driven by automotive fuel and clothing, signaling persistent price pressures. The AUD strengthened broadly, leading gains against the Canadian Dollar and other peers.