Australian consumer price inflation slowed to 0.6% in the June quarter, down from a 1.4% rise in the previous quarter, according to data released by the Australian Bureau of Statistics on July 29[citation needed]. The annual CPI eased slightly to 4.0% from 4.1% over the same period, with core inflation's trimmed mean measure rising 0.8% in the quarter, below analyst forecasts of 0.9% [1, 2]. The annual core inflation rate stood at 3.6%, marginally below both market expectations and Reserve Bank of Australia projections [1, 2]. For June alone, monthly CPI declined by 0.1%, pulling the annual pace down further to 3.8% [1, 2].

The RBA has raised interest rates three times in 2026, lifting the cash rate to 4.35% in an attempt to tame inflation [1, 3, 4, 2]. Despite slowed inflation, Governor Michele Bullock cautioned that it remains uncertain whether the rate hikes to date are enough to return inflation to the target range. She said underlying inflation remains elevated and "some further easing in the growth of demand is likely to be required if we are to bring inflation back down sustainably to target" [3, 4, 1]. She added, "The Board is prepared to act as required to achieve its mandate, including by increasing the cash rate further if needed" [4].

The labour market remained resilient through June with job creation continuing despite a modest uptick in unemployment [1, 2]. However, the housing market has weakened more than expected, leading the RBA to monitor its impact on consumer spending [3].

Markets have reduced the probability of an interest rate hike at the RBA’s August meeting to around 4%, down from 21% earlier, but still price in about a 40% chance of a hike later this year [1, 4, 2].

Recent surges in oil prices linked to renewed tensions between the U.S. and Iran are expected to add upward pressure on inflation in the near term [1, 3, 4, 2].

Governor Bullock spoke on July 28 in Sydney about the economic outlook and inflation path, highlighting the need for demand to slow further to meet inflation goals [3, 4]. The next major policy decision will come with the RBA board meeting in early August, where officials will assess incoming data and determine whether further increases to the cash rate are warranted.