Australian Inflation Eases to 3.5%, Housing Prices Remain Top Driver
On.cc · 2 SOURCESabout 2 hours ago2 MIN
Summary
Australia's consumer price index rose 3.5 percent in the 12 months to July, marking the lowest annual figure recorded recently and down from 3.8 percent in June, according to the Australian Bureau of Statistics . While headline inflation improved, the Reserve Bank of Australia's preferred underlying measure remained unchanged at 3.6 percent, suggesting persistent price pressures in certain sectors .
Key Points
- The Australian Bureau of Statistics (ABS) reported on Wednesday that the CPI rose 3.5 percent year-on-year to July, the lowest annual figure since November 2025
- The trimmed mean inflation, the RBA's preferred underlying measure, held steady at 3.6 percent in July, unchanged from June
- Commonwealth Bank of Australia economists had forecast CPI growth would fall to 3.2 percent and trimmed mean would ease to 3.5 percent
- Housing prices drove headline inflation the most, rising 5.0 percent annually, with new dwelling prices up 5.7 percent as builders passed on higher material and labor costs
- Automotive fuel prices jumped 7.5 percent from June to July due to rising global oil prices and the winding down of federal fuel tax relief
Why It Matters
The RBA projects trimmed mean inflation will drop to 3.3 percent by December before falling within the bank's 2-3 percent target range in 2027 . The divergence between headline improvement and steady underlying inflation highlights the challenge facing policymakers in bringing all price pressures to heel while supporting economic growth.
The RBA projects trimmed mean inflation will drop to 3.3 percent by December before falling within the bank's 2-3 percent target range in 2027 . The divergence between headline improvement and steady underlying inflation highlights the challenge facing policymakers in bringing all price pressures to heel while supporting economic growth.