Mortgage holders could see more rate relief within weeks after the Reserve Bank’s preferred measure of inflation fell to 2.7 per cent annually.
Trimmed mean inflation, which omits volatile items to measure underlying growth in prices, came in at 0.6 per cent in the June quarter, the the Australian Bureau of Statistics reported on Wednesday.
The figure was in line with consensus expectations.
It represented a 0.2 per cent drop in the annual trimmed mean from the March quarter and continued progress towards the midpoint of the RBA’s two to three per cent target band.
But the result was slightly above the central bank’s forecast in its latest statement on monetary policy in May.
Nevertheless, alongside a recent uptick in unemployment and weaker-than-expected household spending, it should be enough to secure another 25 basis point cut.
After the RBA’s last meeting, where it shocked the market by holding rates steady, Governor Michele Bullock said the board was waiting to confirm whether inflation is still on track to sustainably reach 2.5 per cent.
Ahead of the ABS data release, money markets were pricing in a 95 per cent chance the RBA would lower the cash rate to 3.6 per cent on August 12.
The headline consumer price index rose 2.1 per cent over the 12 months to June.
Housing, food and health costs drove inflation higher, said ABS head of prices statistics Michelle Marquardt.
“This is the lowest annual inflation rate since the March 2021 quarter,” she said.
Meanwhile falling petrol prices took some steam out of the index.