RBA warning as rate hike expected within weeks

The Reserve Bank of Australia is now widely anticipated to hit Australians with another interest rate increase before the end of the year, with the bank warning high demand is weighing on inflation prospects.Just when it looked like the RBA’s next move would be a rate cut, hotter-than-expected inflation in July has sparked widespread concern that hikes are well and truly back in the picture.New data on Wednesday revealed the Consumer Price Index (CPI) rose 3.5% for the 12 months to July, taking it to the lowest level since the start of the Iran War in February.While positive at first glance, the figure is skewed by the run off of electricity rebates and changes to fuel cost relief and is higher than the 3.3% economists had expected.Trimmed mean inflation, which strips out the most volatile month-to-month prices, is relied on more heavily by the RBA for rate decisions and paints a grimmer picture.It remains unchanged at 3.6% for a third month in a row, rather than having passed a clear peak as expected by the RBA in its forecasts earlier this year. Concern that higher inflation may be becoming entrenched in Australia’s lacklustre economy is likely to push the bank to act quickly.RBA...