Just when interest rate worriers were getting relaxed enough to believe the Reserve Bank was done and dusted with rate rises, along comes a rise in inflation in August that now has the media speculating that there could be more hikes to come.

For those who don’t hang out for economic data drops, here’s what you missed. Inflation was up 0.8% across August taking the annual reading to 5.2%, which was an uptick from July, which came in at 4.9%, which sparked suggestions that the RBA didn’t need a 13^th rate rise.

Since then, thanks to those great guys in OPEC+ and public enemy number one Vladimir Putin, oil prices have pushed the headline inflation rate up.

However, the RBA’s new Governor Michele Bullock and her board aren’t dumb enough to raise rates on that inflation number. Here’s why:

1. It’s only one month, but if the increases continued, I’d say the RBA could raise again.
2. The underlying rate of inflation or core inflation, which takes out volatile spikes to overall prices, actually fell from 5.8% in July to 5.5%.
3. Here’s the view of CBA’s economics team on this inflation rise: “We view the uptick in inflation in August as a temporary hump in the downward trend in train since December last year. We think the RBA will be inclined to see it that way too when it meets next Tuesday for the October rate decision”.
4. The RBA would know that borrowers have only felt 66% of the 4% rise in the cash rate and then home loan interest rates. Why? 40% of borrowers were on low fixed rate home loans but many of these people now are facing the daunting task of repaying a big jump in their commitments to their lenders.
5. Economic indicators are starting to show that rate rises are biting the kind of spending people can put off.

A colleague of mine has a friend who has worked as a dental nurse in Sydney’s south-west for a long time. Thursdays are usually hectic and the team is run off its feet. Last week, Thursday was ‘dead’, and the dentist was doing jobs that lesser trained staff did, like cleaning teeth. The casuals were sent home. Unless it's an emergency, going to the dentist can be put off and it’s a current sign of a slowing economy that will take official statistics a few months to catch up on.

Policy-making bodies like the RBA and Treasury actually try to talk to real people to monitor the “more now” signs out there in the economy.

I recall Gerry Harvey telling me that Treasury sent young economists to talk to him to get a feel for the economy. In his typical way, he said: “Nice young blokes, but they didn’t know much about retail.” But at least they try, and I suspect Michele Bullock will be surveying all the data (official and unofficial) before she risks a potentially unlucky 13^th rate rise.

Ms Bullock will also be aware of this nifty creation from AMP’s Shane Oliver and his team of economists.

It’s called the Australian Pipeline Inflation Indicator. The blue line shows how the more ‘now’ indicators say inflation is falling faster than the official CPI reading, shown as a red line.