Inflation jumped higher in August, defying a broader slowdown in cost pressures since December last year.

Annual inflation rose to 5.2 per cent in August, up from 4.9 per cent in July, as price pressures intensified, the Australian Bureau of Statistics said on Wednesday.

While the figure was in line with economists’ expectations that price pressures would accelerate, the evidence of ongoing inflationary pressures will call into question the consensus view that the Reserve Bank is done with raising rates.

The data shows households and business across the country are feeling pain at the bowser with petrol prices skyrocketing 9.1 per cent higher in August.

Petrol climbed to $2.11 a litre last week, up from $1.80 in June, according to analysis by the Australian Institute of Petroleum.

Amid an acute housing shortage, rental costs also jumped higher, climbing 7.8 per cent – the fastest pace in more than a decade.

Meanwhile, insurance costs soared by 14.7 per cent over the year to August, after consumers saw price rises for their home and car insurance.

However, easing inflation in food, electricity, gas and household furnishings showed prices continued to normalise for certain goods and services.

Measures of consumer price growth excluding volatile items, like groceries, fuel and holiday travel, continued to ease, falling to 5.5 per cent in August, down from 5.8 per cent in July.

Another rate hike in store?

The figures confirm that the RBA’s efforts to tame price pressures are not yet over.

Earlier this month, the minutes of RBA’s board meeting showed the case to raise the cash rate was based on the risk that inflation remained above the bank’s target for an extended period.

“This could occur … if high services price inflation is more persistent than expected,” the minutes read.

Services inflation, a measure that more closely reflects spiralling rent and energy prices, has remained stubbornly high, and will be an important factor for whether the RBA decides to hike again.

Before the release of August’s monthly inflation print, analysts had cautioned that the reading had a higher representation of still-high services inflation, which had not been fully accounted for in previous monthly readings.

The fresh inflation figures come ahead of the October RBA board meeting next Tuesday – newly installed governor Michele Bullock’s first at the helm – where members will weigh up whether to hike or hold the official cash rate, which currently sits at 4.1 per cent.

While the RBA still considers the Bureau of Statistics’ quarterly inflation reading as the best gauge of price pressures across the economy, the newly established monthly indicator still factors into the central bank’s thinking on rates decisions particularly in the event when it delivers a surprise result.

Ahead of the fresh inflation data, Treasurer Jim Chalmers warned that monthly inflation figures tended to be more volatile than quarterly readings.

“The big picture is that inflation is moderating in welcome ways, although we’d like it to moderate faster,” Dr Chalmers said.

“Inflation peaked in quarterly terms in the March quarter 2022 before the election and around Christmas time in annual terms.

“Inflation remains the primary challenge in our economy and that’s why the primary focus of the Albanese government is rolling out billions of dollars in assistance to take some of the edge off cost-of-living pressures without adding to inflation.”

More to come.