Australian inflation unexpectedly eased to 3.8% in the year to June, according to new ABS data, reducing the chances the Reserve Bank will raise interest rates at its August meeting.
Key facts
- Inflation eased to 3.8% in the year to June, down from 4%.
- The result was lower than some economists had anticipated.
- The Reserve Bank is now seen as less likely to hike rates next month.
- The RBA's next rate decision is scheduled for 11 August.
- Australian Bureau of Statistics data showed inflation still tracking above target.
Australian mortgage-holders have “dodged a bullet”, with the Reserve Bank now less likely to raise interest rates next month after new data showed inflation unexpectedly eased, according to the Guardian.
Figures from the Australian Bureau of Statistics showed inflation eased to 3.8% in the year to June, down from 4%. While the result indicates inflation remains too high, it was tracking lower than anticipated.
The consumer price report had been closely watched, with some economists describing it as a “make-or-break” moment ahead of the Reserve Bank’s upcoming rate decision.
The RBA is scheduled to make its next interest rate decision on 11 August. The softer-than-expected inflation reading reduces the likelihood of a rate rise at that meeting, easing pressure on households with mortgages.
Despite the improvement, the data confirms inflation is still above where policymakers would prefer it to be, leaving open questions about the future path of interest rates in Australia.
Why it matters
Interest rate decisions directly affect the mortgage repayments of millions of Australian households. A lower-than-expected inflation figure reduces the chance of a rate hike, offering potential relief to borrowers already managing higher living costs.
Frequently asked questions
What was Australia's inflation rate in the year to June?
According to ABS data reported by the Guardian, inflation eased to 3.8% in the year to June, down from 4%.
When is the Reserve Bank's next interest rate decision?
The RBA's next rate decision is scheduled for 11 August.
Does the lower inflation mean rates will not rise?
The softer inflation figure makes a rate hike less likely at the August meeting, but the data shows inflation is still considered too high.