Monthly inflation lifts to 5.2 per cent in August, as rising fuel, food ...

The annual rate of inflation picked up in August to 5.2 per cent from 4.9 per cent, according to the latest monthly measure of inflation.

Key points:Monthly inflation picked up in August, rising to 5.2 per centBut the underlying measure of inflation still declined, when volatile prices are stripped from the dataHousing, transport, and insurance prices were some of the biggest drivers

The Australian Bureau of Statistics (ABS) says housing, transport, food, and insurance were the most significant drivers of the price increases.

A surge in fuel prices was particularly important.

It's the first time the monthly inflation indicator has picked up since April, and it was driven by prices most people care about.

But economists were expecting the increase last month, so they weren't taken by surprise.

And they say underlying measures of inflation suggest the trend for inflation is still likely to head downwards this year, despite the return of higher fuel prices in August and September. That trend will have a bearing on the Reserve Bank's future interest rate decisions. 

The graph below shows the monthly figure (in red), and the monthly figure with volatile items stripped out (in blue).

Callam Pickering, APAC economist at global job site Indeed, said he still doesn't expect the Reserve Bank to lift interest rates again this year, although other economists think it's a possibility.

He said household budgets would also be hurting from the most significant price increases we've seen in recent weeks.

"The biggest contributors to annual inflation were housing, transport and food and beverages," he said.

"That prices are rising so quickly in what many consider essentials remains a concern and suggests that cost-of-living pressures remain acute for many Australians."

High and rising petrol prices made a noticeable return.

They were one of the most significant price increases in the economy and contributed to the rise in transport costs overall, and they could feed into supply chains in coming months.

In monthly terms, automotive fuel prices jumped 9.1 per cent in August, and the annual rate of growth for fuel prices jumped to 13.9 per cent.

Markus Varik and Bobby Alonzi, owners of Easy Peasy Removals, have 10 vehicles that need refuelling regularly.

This year, diesel will cost the business an extra 25,000 to 35,000 dollars and they'll spend 20,000 dollars more on WorkCover insurance.

Markus Varik (left) and Bobby Alonzi (right), owners of Easy Peasy Removals, say the rising cost of fuel has been dramatic.(ABC News: Pete Healy)

Mr Alonzi said diesel fuel had increased 20 to 30 cents per litre over the past 12 months and they were having to pass some of those costs on to customers.

"It's just unbearable at the moment. Something that used to cost us $1.80 a litre is now $2.40, and it's fluctuating up and down, you can never predict it," he said.

"And WorkCover has just exploded by a couple of percentage [points] extra per year.

"This industry specifically, we are in a high-risk category as we're carrying furniture and heavy items, and it's about 6 to 8 per cent for the increase in WorkCover," he said. 

However, Mr Alonzi said despite the pressures from rising costs, he was "quite optimistic" because he still felt supported by the community.

"We're getting more and more busy, and clients are understanding because they feel it in their fuel tanks the same way we feel it," he told the ABC.

"So, when we do give them quotes and book them in, we let them know, 'hey, it's a little bit more expensive since last time you moved', and they're always appreciative and understanding," he said.

Aside from those price increase in fuel and insurance, ABS data show households are also having to absorb even food prices and rising rents.

Clint (surname withheld) told the ABC that he used to get away with spending $60 or $70 on groceries, by avoiding non-essentials.

But now his really basic shopping costs the same as if it contained luxuries.

"And clothing, I don't even consider buying new clothing. It's not even a reality. So I'm making do with mending my old clothes," he said.

He said he couldn't afford a car or insurance, and his last little luxury was a good cup of home-made coffee.

Clint says the rising cost of living has ruled out luxuries, like new clothes.

"I couldn't even contemplate having a car and maintenance costs and insurance and tolls and, no, forget that. That's rich-person talk," he said.

"I need to find another job. But finding a job can be expensive. I need clothing. If I get a job in an office, none of my clothing fits me, it's all falling apart. I need to replace that. Where do I find that money? Where do I find money for another decent pair of shoes to wear to work and look presentable?"

According to the ABS, some food prices increased noticeably last month, but the prices of fruit and vegetables fell.

The main contributors were meals out and takeaway foods (+6.9 per cent), bread and cereal products (+10.4 per cent), and dairy and related products (+10.1 per cent). Annual prices for fruit and vegetables fell again last month (-8.3 per cent) with improved weather conditions leading to increased supply.

Insurance prices are now rising at an annual rate of 14.7 per cent, up from 14.2 per cent in July. It's the fastest pace since the beginning of the monthly CPI series. Higher reinsurance and natural disaster costs drove premiums higher for house, home contents and motor vehicle insurance.

Rent prices are rising at an annual rate of 7.8 per cent, up from 7.6 per cent in July, reflecting strong demand for rental properties and tight rental markets.