Australia's August consumer price index rose 4% year-on-year, up from 3.5% in July, according to data released by the Australian Bureau of Statistics on September 30, while trimmed mean inflation held at 3.6% for a third consecutive month.

The rebound in headline inflation comes as the trimmed mean, a measure of underlying price pressures, remains above the Reserve Bank of Australia's 2% to 3% target range.

Fuel prices climbed 14.8% in the month, and housing was the largest contributor to annual inflation in August. New dwelling prices rose 5.4% year-on-year, with the statistics bureau noting that builders passed on higher material and labor costs to sale prices.

Transport was the second-largest contributor, with automotive fuel prices up 14.8% month-on-month, compared with 7.5% in July. Higher global oil prices and the expiration of the remaining portion of the federal government's fuel tax relief in August combined to push fuel prices up. Electricity prices also rose compared with a year earlier, when government subsidies were still in place.

A day before the data was released, the central bank had already raised interest rates to 4.6%. The Reserve Bank of Australia lifted its cash rate target by 25 basis points to 4.6% on September 29. At the time, the central bank noted that rising global energy prices and domestic capacity pressures kept inflation risks alive, and said further rate hikes may be necessary if needed. That decision was made before the August inflation data was published.

Although headline inflation rebounded in August, it came in below economists' expectations of 4.1%. After the data was released, money markets cut the odds of another rate hike in November to about 20%; some economists still believe a rate increase remains possible this year if energy costs stay elevated.