Australia’s annual consumer inflation rate reached 3.5% in July, down from 3.8% in June and 4% in May, largely because of a drop in housing costs, data from the Australian Bureau of Statistics (ABS) show.
Its annual trimmed mean inflation rate – which excludes the largest positive and negative inflation contributors – stood at 3.6% in July, unchanged from May and June, but above early 2026 levels, ABS data released on 26 August show. Australia’s trimmed mean inflation rate hovered between 3.3% and 3.4% in January-April.
Australia’s housing-related inflation rate reached 5% in July, down from 6.8% in June, likely because of a drop in house prices. Dwelling sales prices rose by 3.9% on the year in July, nationally, after growing by 5.8% in June, data from analytics firm PropTrack show.
In May, the Australian Government ended negative gearing for existing homes to encourage investment in new builds. It also changed its capital gains tax regime to discourage property investment. The tax policies will increase the share of owner-occupiers in the property market, Treasury modelling indicates.
Fuel prices increased by 7.5% – for the first time since March – largely because the Government partially unwound a diesel and petrol excise cut on 1 July. And they could rise again in August. The Government fully ended its excise cut on 2 August, pushing up retail fuel prices.
Retail petrol and diesel prices in Australia’s five largest cities averaged A$2.01/litre and A$2.44/litre, respectively, on 19 August, up from A$1.95/litre and A$2.37/litre on 2 August, data from the Australian Competition & Consumer Commission (ACCC) show.
“The overall impact of changes in taxes on petrol and diesel prices [since July] may be up to 18.8 cents, [after accounting for GST impacts,]” ACCC said on 21 August.
Australia’s modest annual inflation rate decline comes weeks after the Reserve Bank of Australia (RBA) warned that it would raise interest rates if inflation remained elevated. RBA’s Monetary Policy Board held its cash rate target at 4.35%, for the second consecutive time, on 11 August.
“[But the] Board is quite firm that if it needs to raise interest rates, if it looks like inflation is remaining higher than desirable … then [it] is prepared to raise [rates],” RBA Governor Michele Bullock said.
By Avinash Govind