Australia’s headline inflation fee fell to its lowest level in over 4 years throughout the second quarter, strengthening RBA fee reduce expectations for the month.
The Shopper Worth Index rose 2.1% year-over-year within the June 2025 quarter, down from 2.4% within the earlier interval and beneath the two.2% consensus forecast. On a quarterly foundation, inflation slowed to 0.7%, undershooting the 0.8% expectation and marking a deceleration from the 0.9% recorded in Q1 2025.
Key Takeaways
- Headline inflation at 2.1% yearly – lowest studying since March 2021 and throughout the RBA’s 2-3% goal vary
- Quarterly inflation of 0.7% – beneath the 0.8% economist consensus
- Housing sector leads value positive factors – up 1.2% for the quarter, representing the most important contributor
- Meals and well being prices rise – meals and non-alcoholic drinks elevated 1.0%, well being providers up 1.5%
- Transport supplies offset – declined 0.7% throughout the quarter, partially moderating general value pressures
Housing prices, which contributed probably the most to quarterly value will increase at 1.2%, stay a key focus for policymakers given their substantial weighting within the CPI basket and their sensitivity to rate of interest modifications.
Whereas meals and well being providers additionally recorded notable positive factors throughout the quarter, the decline in transport prices helped average the general inflation consequence.
Hyperlink to ABS Australian CPI Report (June 2025 Quarter)
The most recent inflation studying locations Australia’s value pressures close to the underside of the RBA’s 2-3% goal band, offering policymakers with further flexibility to assist financial development by decrease rates of interest.
RBA Governor Michelle Bullock had beforehand indicated in late July remarks that she anticipated inflation “to be within the decrease half of our 2%-3% goal vary” for the June quarter.
Market Reactions
Australian Greenback vs. Main Currencies: 5-min
Overlay of AUD vs. Main Currencies Chart by TradingView
Softer-than-expected inflation knowledge triggered a pointy selloff for the Australian greenback in opposition to most main currencies, with traders seemingly positioning for expectations that the RBA will ship one other fee reduce of their subsequent assembly.
Nonetheless, the Aussie managed to recoup most of its post-CPI losses in opposition to CAD (+0.20%) and USD (+0.18) a number of hours after the discharge whereas holding on to losses in opposition to JPY (-0.11%) and holding regular in opposition to NZD.
