Inflation has risen to its highest level in a year, surprising economists and pouring some doubt on the assumption that another interest rate cut would be handed down by the end of the year.

The monthly CPI indicator rose to 2.8 per cent for July, according to data from the Australian Bureau of Statistics released this morning – far higher than the roughly 2.3 per cent that had been expected.

After months of moderating prices, which had seen the monthly inflation indicator ease to 1.9 per cent in June, today’s result is the highest since July 2024 – before the Reserve Bank began cutting interest rates.

Measures of core inflation also spiked, with the trimmed mean – the RBA’s preferred measure of underlying inflation – up from 2.1 to 2.7 per cent, and the CPI excluding volatile items and holiday travel rose from 2.5 to 3.2 per cent.

“That’s a sharp reversal from the steady disinflation we’ve seen over recent months and takes inflation back towards the top of the RBA’s target band… this suggests price pressures are proving stickier than policymakers had hoped, particularly in housing,” eToro market analyst Josh Gilbert said.

However, the monthly inflation read doesn’t carry the same weight as the ABS’s quarterly numbers.

While the next quarterly data won’t be published until October 29 – after the RBA’s next monetary policy meeting – there will be another instalment of monthly figures before that interest rates decision on September 30.

“The data will be a setback for those expecting continued easing after the rate cut earlier this month,” Gilbert said.

“While the RBA has signalled more easing is likely, today’s figures reinforce the board’s cautious stance and reaffirms that fighting inflation is no easy task.

“Markets still expect another cut before year-end, but if we see more reports similar to this, that expectation will diminish.

“Let’s be clear though, this is just one print. The board prefer to focus on quarterly data, but there’s no doubt this will unsettle the board.”