FX.co ★ Australia Inflation Gauge Rebounds as Core Price Pressures Linger

Australia’s Melbourne Institute Monthly Inflation Gauge rose 1.0% month-on-month in July 2026, reversing a 0.4% decline in June and posting its first increase since April, a sign of renewed inflationary pressures. The move is broadly consistent with the Reserve Bank of Australia’s June meeting minutes, which flagged an expected intensification of underlying price pressures in the June quarter.

Official data showed headline inflation eased to 4.0% in May from 4.2%, largely reflecting lower fuel prices. However, underlying price growth remained stubborn. The trimmed mean measure of core inflation accelerated to 3.6% from 3.4% as firms passed on higher input costs associated with tensions in the Middle East.

Governor Michele Bullock has recently reiterated that underlying inflation remains uncomfortably high and cautioned that it could rise further if higher oil prices resulting from the Iran conflict continue to filter through to broader prices. This backdrop reinforces expectations that the RBA will proceed cautiously on any prospective policy easing.