Australia's July CPI Expected to Show Significant Decline

Australia's Bureau of Statistics is set to release the Consumer Price Index (CPI) for July today at 11:30 AM AEST. Economists anticipate a notable decrease in headline annual inflation, projecting it to fall between 3.2% and 3.3%, down from June's 3.8%. This decline is largely attributed to a base effect, as a 1.3% price rise from July 2025 will no longer be included in the annual calculation. If confirmed, this would represent the lowest headline inflation rate since August 2025.

All four major banks—CBA, ANZ, NAB, and Westpac—are aligned in their forecasts, with CBA and ANZ predicting a 3.2% rate, while NAB and Westpac expect 3.3%. The trimmed mean, which is the Reserve Bank of Australia's (RBA) preferred measure for underlying inflation, is expected to ease to around 3.5%, down from 3.6% in June. Westpac has noted that this measure may rise by 0.4% month-on-month, slightly above the RBA's own projections.

The upcoming CPI release follows the RBA's decision to maintain the cash rate at 4.35% on August 11, a move that was supported by the previous quarter's CPI data. Today's figures will play a crucial role in shaping expectations for the RBA's next board meeting in late September. A trimmed mean reading at or below 3.5% would bolster the case for keeping rates steady, while a higher-than-expected figure could reignite discussions about potential policy tightening.

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Source: KLEA News