Inflation leaps to 4% stoking fears of fifth interest rate hike before Christmas

AI desk brief

Australia’s August inflation rose to 4.0% y/y from 3.5%, keeping headline and underlying inflation well above the RBA’s 2.5% target and intensifying expectations for another rate hike before Christmas. Fuel prices jumped 15% on higher global oil prices tied to the Middle East conflict, while transport and home-building costs were also key contributors.

The RBA had already raised the cash rate to 4.6% for a fourth time in 2026, and both Treasurer Chalmers and the central bank are pointing to persistent inflationary pressure from global supply shocks and domestic capacity constraints. For metals, the near-term takeaway is mildly bearish via firmer rates/real-yield expectations, though the oil-driven inflation impulse adds some geopolitical support.