As you’re likely aware, on Wednesday, the Australian Bureau of Statistics (ABS) released the latest Australian inflation data for the year to July at 11:30am AEST.
And many investors buying ASX shares chose that moment to reach for their sell buttons.
Indeed, at 11:30am, the S&P/ASX 200 Index (ASX: XJO) was up a healthy 0.8%. By the time the closing bell rang, the ASX 200 was down 0.4%.
Much of that selling pressure came as investors fear that stubborn inflation levels will lead to yet another interest rate hike from the Reserve Bank of Australia (RBA) in 2026.
That’s because headline inflation of 3.5% for the year to July came in materially higher than consensus expectations of 3.3%.
And trimmed mean inflation â which takes out certain volatile items, like automotive fuel and is the RBA’s preferred gauge â remained stuck at 3.6%, and was up 0.5% for the month of July. The trimmed mean figure also exceeded consensus expectations. And it remains well above the RBA’s target inflation range of 2% to 3%.
Now ASX share investors have already had to endure three RBA interest rate increases in 2026. Although the central bank kept rates on hold at 4.35% at its last two meetings, this still sees the cash rate back at its 2024 peak, and matching the highest levels seen since 2011.
So, what can ASX investors expect from interest rates now?
What the experts are saying on Aussie inflation and the RBA’s interest rate path
Josh Gilbert, lead analyst for APAC at eToro, said that the trimmed mean inflation figure is what’s likely to worry RBA governor Michele Bullock.
Gilbert noted:
It suggests underlying price pressures are not easing quickly enough, despite three rate hikes this year and a labour market that is beginning to soften. The board paused in August because it wanted more evidence, and this is not the evidence it was hoping for.
The trimmed mean has now sat at 3.5% or above for three months running, after holding at 3.3% in February and March. That number isn’t drifting back towards the 2-3% target band, it’s moving away from it.
He added that another interest rate hike isn’t locked in for ASX share investors yet.
“One hotter print does not make another hike inevitable, particularly with unemployment rising to 4.5%,” he said.
However, Gilbert added, “The RBA has repeatedly warned it will act if inflation looks like becoming embedded, and this read today will have the board feeling a little nervous.”
CreditorWatch chief economist Ivan Colhoun sounded a more bearish note on the RBA’s next interest rate move following the latest ABS data.
According to Colhoun:
It really leaves the RBA board no option but to raise Australian interest rates further at the upcoming September board meeting. The board is dealing not with upside inflation risks and cost pressures, but with upside inflation reality.
And we’ll leave off with Commonwealth Bank of Australia (ASX: CBA) economist Belinda Allen (quoted by The Australian Financial Review).
“We judge the broad-based upside surprise in the July CPI as having crossed that threshold and materially increased the likelihood of another RBA hike,” she said.
Stay tuned!
The post Buying ASX shares? Here’s what the latest inflation data means for interest rates appeared first on The Motley Fool Australia.
Should you invest $1,000 in Commonwealth Bank Of Australia right now?
Before you buy Commonwealth Bank Of Australia shares, consider this:
Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Commonwealth Bank Of Australia wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
And right now, Scott thinks there are 5 stocks that may be better buys…
* Returns as of 1 August 2026
.custom-cta-button p {
margin-bottom: 0 !important;
}
More reading
- CBA vs Westpac shares: Which is the best buy?
- CBA shares bounce after settling long-running class action
- Will CBA shares ever get back to the top of the ASX 200?
- Buy, hold, sell: DigiCo Infrastructure REIT, CBA, Telstra shares
- How many CBA shares do I need to buy for $8,000 of passive income?
Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.