The pace of inflation has slowed more than expected, suggesting the Reserve Bank's rapid-fire interest rate hikes are working.
What you need to know
Inflation rose 4.9 per cent in the 12 months to July 2023, according to the Australian Bureau of Statistics (ABS).
This is down from 5.4 per cent in the 12 months to June 2023, and down from a peak of 8.4 per cent in December 2022.
Price rises in the past 12 months: Housing +7.3 per cent, food and non-alcoholic drinks +5.6 per cent, electricity +15.7 per cent.
Price declines in the past 12 months: Fuel -7.6 per cent, fruit and vegetables -5.4 per cent.
The Reserve Bank of Australia (RBA) wants inflation to fall to the 2-3 per cent range.
🗣️ What they said
Treasurer Jim Chalmers: "It's pleasing to see inflation is moderating but we know it will remain higher than we'd like for longer than we'd like."
ABS head of prices statistics Michelle Marquardt: "The Energy Bill Relief Fund provides eligible households with rebates ranging from $43.75 to $250 in July. If we exclude the impact of rebates from the July 2023 figures, electricity prices would have recorded a monthly increase of 19.2 per cent."
Betashares chief economist David Bassanese: "The July monthly CPI result was further good news for mortgage holders, with inflation continuing to surprise on the downside. The overall continued decline in inflation further cements the case for the RBA leaving interest rates unchanged at its policy meeting next week. My base case remains that the RBA has now concluded raising interest rates."
Why you should care
Inflation trending lower is a good case for the RBA to stop hiking interest rates and give some reprieve to mortgage holders, says economist David Bassanese.
This in turn encourages investors to get back into the property market - which is good news for renters too because it could make more properties available and help ease demand-driven price rises.