Australia’s monthly CPI spiked to 2.8% yoy in July, well above expectations of 2.3% yoy and up sharply from 1.9% yoy in June. It was the highest annual inflation rate since July 2024, breaking several months of easing price pressures. Core measures also firmed, with CPI excluding volatile items rising from 2.5% yoy to 3.2% yoy and trimmed mean jumping back from 2.1% yoy to 2.7% yoy, a pace last seen three months ago.
The result adds to concern that inflation is proving sticky, though July’s data, as the first month of the quarter, is skewed toward goods and offers less insight into services inflation than subsequent months.
For the RBA, the print is a warning sign but not a trigger for panic. Policymakers will want to wait for the full quarterly inflation update before adjusting course. Today’s data nonetheless rules out a September cut.
Barring a significant deterioration in the labor market or other downside shocks, the more realistic timeline for the next rate move remains November.
