Inflation undershoot tempers RBA rate hike expectations

The Australian Bureau of Statistics (ABS) has released the all-important Consumer Price Index (CPI) for the month/quarter of June, which rose by 3.8% in the 12 months to June 2026, driven by housing, which rose by 6.8%:

“Annual inflation for New dwellings has reached its highest level in almost three years, at 5.8%”, Rachael McCririck, ABS head of price statistics, said. “This was driven by builders passing on higher material and labour costs”.

The policy-relevant trimmed mean inflation was steady at 3.6% in the 12 months to June 2026, the same as in the 12 months to May 2026.

However, on a quarterly basis, trimmed mean inflation rose to 3.6% in the 12 months to June 2026, up from 3.5% in the March quarter.

The good news is that the 3.6% trimmed mean inflation was below both the market’s (3.7%) and RBA’s (3.7%) expectations, which significantly lowers the likelihood of the RBA hiking rates next month.

Australia’s embattled mortgage holders can probably breathe a sigh of relief.