Latest Inflation Says More Rate Hikes Are Needed!

We got the latest inflation data from the ABS today, and while the headline rate of the Consumer Price Index (CPI) rose 4.0%, down from 4.2% in the 12 months to April 2026, a quick look revealed a more troubling picture as the so called trimmed mean was 3.6%, up from 3.4% in the 12 months to April 2026. This is the measure the RBA tends to prefer when assessing inflation and is well above the RBA’s target. The RBA aims for inflation at the midpoint of its 2-3% target, a goal it has failed to achieve since 2021, and it been above the top of the band since the second half of last year. Elevated inflation is crimping households’ purchasing power, with the central bank’s three rate hikes this year compounding the squeeze, and the US war against Iran adding to pressures by pushing up fuel prices. This suggests more hikes are likely, with the next RBA’s monetary board on Aug. 10-11. Traders are betting on a 66% change of the next move being up, despite recent commentary from some economists suggesting a long term hold. The largest contributor to annual inflation in May was Housing, which rose by 6.5 per cent. This was followed by a 3.3 per cent rise in Food and non-alcoholic beverages and a 3.3 per cent rise in Transport. Annual Housing inflation was 6.5 per cent in the 12 months to May. This reflects rising costs for Electricity, New dwellings and Rents. Across the states Hobart saw annual inflation come in at 5%, followed by Adelaide at 4.4%, Sydney at 4.2%, Canberra and Brisbane at 4.1%, Perth at 4%, Darwin at 3.9% and Melbourne at 3.5%. So while we hopefully see further falls in the price of Oil, offset by the eventual removal of the excise relief, it does look like the embedded inflation which was present across the economy before the war remains, and as a result, unless we get a significant upside surprise to unemployment tomorrow, another rate hike is very likely. The combination of strong Government spending and borrowing, and the constrained productivity across the country will continue to force the RBA’s hand. http://www.martinnorth.com/ Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/ Go to the Walk The World Universe at https://walktheworld.com.au/ Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts Please consider supporting our work via Patreon: https://www.patreon.com/DigitalFinanceAnalytics The full detailed set of post code data is available as a subscription service. Or make a one-off contribution to help cover our costs via PayPal at: https://www.paypal.me/MartinDFA We also can receive bitcoins at: 13zBL1oRib9VJu8Uc9zUGNhxKDBBgUpDN1 Please share this post to help to spread the word about the state of things.... Caveat Emptor! Note: this is NOT financial or property advice!! 🚨BEWARE OF SCAMMERS🚨 As there are accounts impersonating Walk The World in the comments on YouTube, note that our comments will have a distinguishable verified symbol. And remember that we will never message you asking you to give us money or talk to us on other platforms such as WhatsApp or Telegram