‘Dodged a bullet’: inflation eases to 3.8%, reducing chances of interest rate rise for Australia’s mortgage holders
Summary
Australia’s inflation rate dropped to 3.8% for the year ending June, which lowers the chance that the Reserve Bank of Australia (RBA) will raise interest rates next month. While some price increases remain, particularly in services and homebuilding, the overall slower inflation gives relief to mortgage holders.Key Facts
- Inflation in Australia eased from 4% to 3.8% in the year to June.
- The RBA’s preferred measure of inflation rose 0.8% in the June quarter, less than expected.
- This slower inflation reduces the likelihood of an interest rate increase on August 11.
- Falling fuel prices in June helped lower the headline inflation rate.
- Homebuilding costs rose 5.8%, the fastest increase in three years, due to higher materials and labor costs.
- Inflation pressures in the service sector remain a concern.
- Economists say the previous rate hikes by the RBA are starting to work against inflation.
- Uncertainty remains due to geopolitical events like the Middle East conflict affecting fuel prices.
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