(Bloomberg) -- The chief of Westpac Banking Corp. said Australia’s economy is battling with the so-called last mile of returning inflation to the Reserve Bank’s target, a day after monthly consumer-price data showed an unexpected spike.

Westpac Chief Executive Officer Peter King’s observations on Thursday are some of the first from the banking industry after CPI figures prompted money markets to bolster bets on a possible interest-rate increase at the RBA’s next meeting in August.

“We’re just seeing that it is hard to get this final bit of inflation out of the system,” King told an Australian Banking Association Conference in Melbourne. “Whether that means we’ll get a rate increase or whether it just means we live with interest rates at the level they’re at, time will tell.”

The RBA targets inflation of 2-3% and Wednesday’s monthly figure came in at 4%.

The head of Australia’s third-largest bank by market value said the lender’s books showed a strong business sector but that consumers were spending less. His comments echoed those Wednesday by Assistant Governor Christopher Kent, who said the cash rate at a 12-year high of 4.35% was having a greater impact on households than firms.

At Westpac’s half-year results in May, King had said the Australian economy was proving resilient, with the lender expecting a soft landing. Of the bank’s 12 million customers just 19,000 are on so-called hardship arrangements for trouble with outstanding loans, King said Thursday.

--With assistance from Swati Pandey.

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