Australian Inflation Eases to 3.5%, Housing Prices Still Driving Costs

Inflation in Australia eased to 3.5% in July, down from 3.8% in June, according to the latest figures released by the Australian Bureau of Statistics (ABS). This is still above the Reserve Bank of Australia's (RBA) target range of between 2 and 3%. Housing prices were a significant contributor to inflation, rising 5.0% over the past 12 months due to increasing costs for new dwellings.

The ABS reported that new dwelling prices rose by 5.7% in the 12 months to July as builders passed on higher costs for materials and labor. Despite the easing inflation figures, a hold on the cash rate is not certain, with experts predicting further action may be needed to keep inflation under control.

The RBA's trimmed mean inflation rate remained at 3.6% in July, unchanged from the previous month. The board had considered raising the cash rate by 25 basis points earlier this year but ultimately decided to keep it on hold at 4.35%. Governor Michele Bullock emphasized that the possibility of another hike was still on the table if inflation remained above target.