By Jacob Shteyman in Canberra

Australia’s annual headline inflation rate has climbed to four per cent as higher oil prices continue to filter through the economy.

The consumer price index rose 0.4 per cent in the month of August, the Australian Bureau of Statistics reported on Wednesday, a day after the Reserve Bank hiked interest rates to a 15-year high 4.6 per cent.

Annual headline inflation was 3.5 per cent the month prior.

The central bank’s more preferred measure of underlying inflation – the trimmed mean – held steady for a third straight month at 3.6 per cent on an annual basis.

Forecasters had expected the trimmed mean to remain the same, but it remains far higher than the mid-point of the RBA’s two to three per cent target band.

Housing was the largest contributor to annual inflation, up 5.7 per cent in the month, said Rachael McCririck, ABS head of price statistics.

“Annual inflation of 5.7 per cent for housing reflected rising costs for both new dwellings and electricity. New dwelling prices rose 5.4 per cent in the 12 months to August as builders passed on higher costs for materials and labour,” she said.

Transport was the second-largest contributor, reflecting a 14.8 per cent jump in fuel prices as the government’s temporary excise cut wound off.

Speaking after the RBA board decided unanimously to hike interest rates by 25 basis points on Tuesday, governor Michele Bullock said inflation was too high because there was too much demand in the domestic economy.

Higher commodity prices from the Middle East conflict and higher technology prices as a result of the AI investment boom were adding to inflation pressures, she said.

News all day, every day at CityNews.com.au.