FX.co ★ Australia Inflation Rate at 8-Month Low of 3.5%

Australia’s annual inflation rate eased to 3.5% in July 2026, down from 3.8% in June and slightly above market expectations of 3.3%, but it remained above the Reserve Bank’s 2–3% target band. This was the slowest pace of price growth since November 2025.

The moderation was driven mainly by goods inflation, which slowed to an eleven‑month low of 3.2%, and by a further cooling in services inflation, which eased to 3.7% from 4.0%. Housing inflation fell to an eleven‑month low of 5.0% (from 6.8%), with electricity prices recording their smallest increase in four months. Price growth also edged lower for food and non‑alcoholic beverages, at 3.2% compared with 3.3% in the previous month.

By contrast, transport inflation accelerated to 1.6% from 0.1%, while inflation in clothing and footwear was unchanged at 4.9%.

Underlying measures remained elevated. The trimmed mean CPI rose 3.6% year-on-year, the highest since September 2024 and slightly above expectations of 3.5%. The weighted median CPI increased 3.6% from a year earlier, easing only marginally from June’s 3.7%.

On a monthly basis, headline CPI advanced 1.0% in July, the first monthly rise after a flat reading and above forecasts of 0.8%. It was also the fastest monthly increase in four months.