On Wednesday, the Australian Bureau of Statistics (ABS) released the latest consumer price index (CPI), revealing that inflationary pressures, while slightly easing, are still above the Reserve Bank of Australia's (RBA) target inflationary range. Still, the latest print showed inflation was below the central bank's expectations, strengthening the case for a near-term interest rate pause.
In the 12 months leading up to June, headline CPI increased 3.8%, down from 4% in May, in seasonally-adjusted terms. Meanwhile, trimmed mean inflation — which many economists consider a better indicator of inflationary pressures because it strips out goods with volatile price changes — was up 3.6%, unchanged from the year leading up to May.
The biggest contributor to inflation was housing, up 6.8%, compared with a 6.5% increase in the 12 months leading up to May, driven by a 22.4% annual rise in electricity as the Commonwealth and state government electricity rebates ended.
By city, housing prices had the sharpest increase in Hobart, up 9.8% in the year, followed by an 8% increase in Adelaide and 7.7% in Brisbane. Housing prices were the slowest to rise in Melbourne and Perth, both up 5.7% in the year.
New dwelling prices rose 5.8%, up from 5.6% in the previous print thanks to project home builders raising base prices to pass through higher labour and materials costs over the year. Rental prices were up 3.6% in the year, unchanged from May.
Other large contributors were clothing and footwear, up 5%, year-over-year, and education, which rose 4.7%, annually.
Overall, inflationary pressures varied across the capital cities, with Hobart and Adelaide recording the largest annual price increases, both rising 4.2%. In contrast, Melbourne experienced the smallest increase, with prices up just 3.2% over the year.
The recent CPI print is the latest clue to the RBA's next move on monetary policy. Australia's central bank lifted the official cash rate (OCR) three times in 2026, bringing rates to 4.35%. The bank has repeatedly said it would not consider lower rates until inflation was back within the 2% to 3% range.
The RBA left rates on hold during its June meeting, stating that it needed more time to see how previous interest rate hikes would impact the economy. But RBA Governor Michele Bullock noted that the decision did not "rule out further tightening in monetary policy if that is what is required to get inflation down."
