Latest data of the Australian Bureau of Statistics (A.B.S.) shows that annual CPI inflation is now at 6.9 % (trimmed mean inflation at 5.3 %). It’s great news to see a lower CPI inflation than in the previous month and particularly in categories such as fruit and vegetables. However, with one data point, it is too early to say that inflation is coming down. Moreover, the latest Survey of Consumer Inflationary and Wage Expectations shows that the expected inflation rose to 6 percent. This indicates a higher risk that expectations of high inflation may become entrenched. At the same time, the Australian economy has been quite resilient as evidenced by an unemployment rate of just 3.4 %. Given that inflation remains substantially higher than target and the overall economic situation, my view is that the Reserve Bank of Australia should increase interest rates in the next meeting.