Australia’s annual inflation rate accelerated to 4.0% in August 2026 from 3.5% in July, reaching its highest level in three months but remaining below the 4.1% market forecast. The monthly CPI rose 0.4%, below expectations for a 0.5% increase and down from July’s 1.0% gain. Housing inflation increased to 5.7% from 5.0%, while transport inflation climbed to 5.6% from 1.6%; food and non-alcoholic beverages inflation eased to 3.0% from 3.2%, and clothing and footwear inflation was 2.6%. The trimmed mean CPI and weighted median both held at 3.6% year-on-year, although the trimmed mean rose 0.2% month-on-month, below the 0.3% forecast. Core inflation remained above the Reserve Bank’s 2%-3% target band after the central bank raised its policy rate to a 15-year high of 4.60% on Tuesday. Markets cut the probability of another increase in November to 20% from 36% before the data and shifted expectations for the next hike toward March from February. The Australian dollar fell below $0.70 to a nine-week low and was on track for a roughly 2.8% monthly decline as the stronger US dollar and Middle East tensions weighed on the risk-sensitive currency.