Australia's consumer price index (CPI) rises more than expected in July, core inflation eases By Investing.com

Investing.com – Australia's consumer price index inflation rose more than expected in July on high fresh food costs, raising ongoing concerns that the Reserve Bank may raise interest rates further to curb stubborn inflation.

In July, manufacturing rose 3.5% year-on-year, data from the Australian Bureau of Statistics showed on Wednesday. The figure was above expectations of 3.4% but lower than the previous month's 3.8%.

Core consumer price index (CPI) inflation, which excludes volatile items such as fuel, fresh food and holiday spending, fell to 3.7% in July from 4% in the previous month.

The increase in the inflation rate was mainly due to higher prices for fresh food, while housing costs fell slightly compared to the previous month. Electricity discounts also helped to reduce energy costs.

Nevertheless, the July reading showed that inflation was still comfortably above the RBA's annual target of 2-3 percent, with the higher-than-expected Consumer Price Index (CPI) also sparking further concerns about higher interest rates.

The inflation data comes just weeks after RBA officials warned that the bank could raise interest rates even further to combat stubborn inflation. Minutes of the central bank's August meeting also showed that policymakers had considered a possible rate hike.

Analysts expect the central bank to keep interest rates high for longer and begin cutting interest rates in the course of 2025.

The index rose 0.2 percent after the inflation rate was released, while the stock index fell 0.7 percent.