Inflation comes in hotter than expected as housing costs grow

Hotter than expected inflation has raised expectations for another RBA rate hike, with housing costs a key driver of price gains.Monthly inflation data released by the Australian Bureau of Statistics on Wedneday showed the Consumer Price Index (CPI) rose 3.5% over the 12 months to July, down from 3.8% in June.But the easing was largely due to a calculation quirk, with big price gains in energy costs last year – as a result of government subsidies ending – no longer being captured in the annual figure.The consensus among economists leading into Wednesday’s inflation data was for a 3.3% rise in the CPI, lower than the 3.5% actual headline figure. Annual trimmed mean inflation, which smooths out the effects of temporary or volatile price movements, remained unchanged at 3.6%, but ANZ economist Madeline Dunk noted the 0.5% monthly increase was the highest rise in the monthly trimmed mean in the history of the series."The result suggests trimmed mean inflation is likely to overshoot the RBA’s expectations for the third quarter," she said.ANZ changed its rates forecast on the back of the result, now predicting the RBA will hike the cash rate to 4.6% when it meets in November.Housing infl...