The Australian Bureau of Statistics (ABS) reported the monthly Consumer Price Index (CPI) rose 2.8% in the year to July 2025, up from 1.9% in June – the highest rate since July 2024.
“This is the highest annual inflation rate since July 2024, following several months of easing inflation,” said Michelle Marquardt (pictured left), ABS head of prices statistics, in a media release.
The key drivers were housing (+3.6%), food and non-alcoholic beverages (+3.0%), and alcohol and tobacco (+6.5%). Electricity was the standout contributor, rising 13.1% annually, partly due to July price reviews and the delay in Commonwealth Energy Bill Relief Fund rebates for NSW and ACT households.
ABS noted trimmed mean inflation rose to 2.7% in July, up from 2.1% in June.
“This was similar to the rate that we saw three months ago,” Marquardt said.
Rents eased slightly, rising 3.9% in the 12 months to July, down from 4.2% in June, while new dwelling prices increased just 0.4% for the year, reflecting subdued housing construction.
The July data has pushed back expectations for another RBA move. Market watchers say a September rate cut is now highly unlikely, with the board expected to wait until the November meeting, once the September quarter CPI is released on Oct. 29.
“The monthly CPI indicator has seen a sizable hike in July, lifting to 2.8% – the first rise in seven months,” said Sally Tindall (pictured centre), Canstar.com.au data insights director.
“Much of the increase can be explained by July electricity price hikes, the delay in federal government rebates for households in NSW and the ACT, and higher holiday travel costs.
“The possibility of a September cash rate cut was a long shot at best, however, this round of monthly data squashes pretty much all hope of back-to-back moves.”
Despite inflation pressures, lenders remain competitive in the variable mortgage market.
Easy Street has launched the lowest variable owner-occupier rate at 4.89% (comparison 4.94%), though the offer closes on 10 October and must be funded by Dec. 10.
Since RBA’s August cut, 88 lenders have announced variable rate reductions, with most passing on the full 0.25 percentage point cut. Canstar data shows:
“Despite inflation nudging up, lenders are still competing for new home loan customers, with the new lowest variable rate in our database dropping to an ultra-competitive 4.89%,” Tindall said.
“It’s not the only lender putting competitive rates on the table. The Canstar database shows almost 30 lenders currently offer at least one variable rate under 5.25% for owner-occupiers paying principal and interest.”
In a Westpac analysis, senior economist Justin Smirk (pictured right) said the July figures suggest inflation risks remain tilted to the upside.
“The Monthly CPI Indicator rose 2.8%yr in July, exceeding both Westpac’s estimate of 2.3%yr and the top of the market forecast of 2.7%yr,” Smirk said.
He warned against dismissing the rise as a one-off electricity spike: “One month does not make a trend, but this move should not be ignored.”
Smirk added that Westpac expects RBA to wait for the September quarter CPI before acting.
“We expect the RBA will take a similar view and, as such, is unlikely to cut rates in September,” he said. “Instead, the bank will likely wait for the full September quarter CPI results, due in the last week of October.”
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