Home borrowers face yet another interest rate hike with inflation climbing again.

The consumer price index grew by 3.8 per cent in the year to June, putting it even further above the Reserve Bank’s 2 to 3 per cent target.

The latest headline inflation numbers, released on Wednesday, are even worse than the March quarter’s 3.6 per cent annual pace – stirring fears the RBA could raise rates again, despite borrowers already dealing with the most aggressive hikes since the late 1980s.

Another rate rise would take the cash rate to a 13-year high level of 4.6 per cent and mark the 14th increase in little more than two years.

Alcohol and tobacco copped the biggest price increases of 6.8 per cent, with excise taxes set to increase next week to account for higher inflation.

This was followed by insurance and financial services on 6.4 per cent and health care on 5.7 per cent.

Inflation has been above the Reserve Bank target for almost past three years, since Sydney joined Melbourne in a long Covid lockdown that exacerbated supply constraints.

But now the cost of services is keeping inflation high and depriving home borrowers of relief, with monthly mortgage repayments 68 per cent higher than May 2022 when the RBA hiking cycle began. 

The consumer price index climbed by 3.8 per cent in the year to June, putting it even further above the Reserve Bank’s 2 to 3 per cent target (pictured, residents in Sydney)

A higher inflation rate means welfare payments are increased at a higher rate through indexation.

But it also means alcohol and fuel excise increases at a steeper pace, with beer and spirit drinkers to incur higher taxes from August 5. 

Inflation the three months to June rose by 1 per cent, following a 1 per cent increase during the March quarter.  

With excise indexed every six months for inflation, that would mean a 2 per cent increase in alcohol taxes from next week.

Someone buying a one litre bottle of vodka, with 40 per cent alcohol content, would be paying 81 cents more from Monday as excise climbed to $41.55, up from $40.74.

A one-litre bottle of Smirnoff already costs $61 at Dan Murphy’s.

The alcohol by volume tax would climb to $103.89 per litre – up from $101.85 now.

The latest numbers have stirred fears the RBA could raise rates against, despite borrowers already dealing with the most aggressive increases since the late 1980s (pictured, Coles shopper)