Australian Inflation Eases to 3.5% as RBA Keeps Cash Rate Steady

Australia's inflation rate has eased to 3.5% in July 2026, marking the fourth consecutive monthly fall, according to new data from the Australian Bureau of Statistics (ABS). This is down from last month's 3.8%, and represents a slowdown in price increases.

The main drivers of inflation were housing, food, non-alcoholic beverages, and recreation and culture. Wages rose by 3.2% over the 12 months to June quarter 2026, but this is still below the rate of inflation, meaning real wages have fallen by about 0.3% in the past year.

The Reserve Bank of Australia (RBA) prefers a measure called the trimmed mean, which ignores extreme price movements and was at 3.6% in July. The RBA keeps the cash rate on hold at 4.35%, targeting an inflation range between 2 and 3%. With both headline inflation and the trimmed mean above this target, some economists expect the odds of a higher cash rate have risen.