Australia's core inflation rate came in stronger than expected in July, highlighting ongoing price pressures within the economy and reinforcing the case for another interest rate increase by the central bank.

Data from the Australian Bureau of Statistics released on Wednesday showed that the closely watched trimmed mean consumer price index (CPI) rose 3.6% year-on-year, exceeding the 3.5% forecast by economists. On a monthly basis, the core price gauge accelerated to a 0.5% gain, up from 0.3% previously.

The Reserve Bank of Australia aims to bring inflation back to the midpoint of its 2-3% target range, a level not seen in nearly five years.

Following the data release, the Australian dollar briefly climbed 0.2% to $0.7176, while traders increased their bets on further monetary policy tightening. Market pricing now implies a 78% probability of another rate hike before December, up from roughly 67% prior to the report. Gains in the equity market were trimmed as well.

This marks the final inflation print before the next policy meeting scheduled for late September. Minutes from this month's gathering revealed that the RBA's rate-setting board had considered another hike to mitigate the risk of rising consumer prices. Ultimately, the board opted to hold steady for now, awaiting additional data while signaling a readiness to act if necessary.