Australian Inflation Eases in June, Interest Rate Hike Expectations Weaken

Australia's annual inflation rate eased more than expected in June, potentially tempering expectations for an interest rate hike. The country's consumer price index rose to 3.8% in the 12 months to June, down from a 4% rate logged in May, according to data from the Australian Bureau of Statistics.

The largest contributors to annual inflation were housing, which increased by 6.8%, followed by food and non-alcoholic beverages at 3.3%, and recreation and culture also rising by 3.3%. Trimmed mean inflation was unchanged at 3.6% in June, matching the previous month's reading.

Despite this, Australia's big four banks expect underlying inflation to remain high in the June quarter, forecasting trimmed mean inflation to rise 0.9% and annual core inflation to lift above the Reserve Bank of Australia's (RBA) target band of 2-3%. This reinforces expectations that the RBA will remain cautious about easing policy.