Australian inflation drops to 3.8% in June
Sydney (30 July)
Australia’s annual consumer inflation rate reached 3.8% in June, down from 4% in May and 4.2% in April, largely because of a fleeting drop in fuel prices, 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 June, unchanged from May but above early 2026 levels, ABS data released on 29 July show. Australia’s trimmed mean inflation rate hovered between 3.3% and 3.4% in January-April.
Fuel prices decreased by 7.3% on the year in June – after rising 7.7% in May – largely because of Australia’s reduced fuel excise rate and a temporary drop in Brent crude futures prices.
But fuel prices have increased since the end of June because of Iran war-linked Brent crude oil price spikes and the Australian Government’s partial wind back of its fuel excise cut. Retail petrol and diesel prices in Australia’s five largest cities averaged A$1.80/litre and A$2.15/litre, respectively, on 22 July, up from A$1.52/litre and A$1.74/litre on 30 June.
Brent crude oil futures last traded at $90.31/barrel (A$134.34/barrel) on 29 July, up from $72.95/barrel on 30 June, data from Trading Economics show.
Australian fuel prices could rise again in August because the Government plans to fully wind back its fuel excise cut early in the month. “[Australia’s] fuel excise relief will end at midnight on Sunday [2 August],” Treasurer Jim Chalmers told reporters on 29 July.
“It was never the Government’s intention for [the cut] to be permanent. We planned to taper that off at the start of the month deliberately so we could … smooth out the transition [to a full excise rate],” Chalmers added.
Australian electricity prices rose by 22% on the year in June, up slightly from 21% in May, ABS data show. Electricity was the largest contributor to Australia’s annual housing-related inflation rate of 6.8% in June.
The Australian Competition & Consumer Commission (ACCC) will work with Australia’s energy regulator to advise Energy Minister Chris Bowen on electricity pricing structures because of inflation concerns, an ACCC spokesperson confirmed to Lithos on 24 June.
Australia’s annual inflation rate decline comes just one day after Reserve Bank of Australia (RBA) Governor Michele Bullock warned that the Australian economy may need to slow because of elevated inflation.
“Some further easing in the growth of demand is likely to be required if we’re to bring inflation back down sustainably to target. A key question in the period ahead is whether [previous monetary tightening] is sufficient to achieve this,” Bullock said.
By Avinash Govind