Australia's inflation accelerates in August, core still stubbornly high

SYDNEY, Sept 30 (Reuters) - Australia's consumer inflation accelerated in August from a year earlier as fuel costs jumped, while core inflation remained stubbornly high for a third month, showing little impact from the four rate hikes aimed at cooling demand.

Sticky inflation forced the Reserve Bank of Australia to lift interest rates to a 15-year high of 4.6% on Tuesday and warn it was ready to hike further if needed. That brought its tightening this year to a full percentage point, far ahead of many other developed economies.

The inflation results were, however, a little less than forecast, with the Australian dollar slipping 0.3% to $0.6964 and 3-year government bond futures rallying 8 basis points to 95.10. Swaps pared back the risk of a November hike to just 20% from 35% previously.

Data from the Australian Bureau of Statistics on Wednesday showed its monthly consumer price index rose 0.4% in August from July, just below forecasts for a 0.5% gain. The annual pace accelerated to 4.0% from 3.5%.

The trimmed mean measure of core inflation increased by 0.2% for the month, below forecasts for 0.3%, leaving the annual pace at 3.6%.

The RBA has out-hawked many of its global peers including the Federal Reserve and the European Central Bank, after three rate cuts in 2025 helped fuel domestic inflationary pressures. Now, with the US-Israeli war on Iran pushing energy prices higher for longer, policymakers worry inflation could become entrenched, having already run above target for five straight years.

Wednesday's report showed fuel costs jumped 14.8% in August from the previous month, driven by higher oil prices and the unwinding of governmental tax relief.

New dwelling prices jumped 5.4% in August from a year earlier as builders passed higher costs on to consumers.