Australia Inflation Eases to 3.5% as RBA Rate Hike Looms

The Australian Bureau of Statistics released inflation figures for July, showing a slight easing in annual inflation to 3.5 per cent.

This is down from 3.8 per cent in June, but the Reserve Bank's preferred underlying measure remains stuck at 3.6 per cent for the third consecutive month.

Housing continues to be the largest contributor to annual inflation, rising 5 per cent, followed by food and non-alcoholic beverages, and recreation and culture.

Transport inflation also increased to 1.6 per cent in July, up from 0.1 per cent for the year to June, with automotive fuel prices rebounding 7.5 per cent after falling for three consecutive months.

Economists are now factoring in a September RBA rate hike, with market goods and services excluding volatile items up 1 per cent and discretionary spending excluding tobacco up 1.5 per cent.