Australia Inflation Hits 2.8% July Highest Since 2024

Australia's inflation unexpectedly surged to 2.8% year-over-year in July 2025, surpassing economists' forecasts and nearing the upper limit of the Reserve Bank of Australia's (RBA) 2%-3% target band. This jump from 1.9% in June was driven largely by higher housing inflation, including a 13% rise in electricity prices following the expiration of government energy relief payments. The annual trimmed mean inflation, which excludes volatile items, also rose significantly to 2.7%, indicating broader inflationary pressures. This inflation increase supports the RBA's cautious approach to interest rate cuts, suggesting policymakers may continue a gradual path in adjusting rates. The data influenced financial markets, with the Australian dollar and government bond yields rising, while equity markets moderated gains. The Reserve Bank remains focused on the upcoming quarterly inflation data, expected in October, to better assess the economic outlook.