Australian Inflation Slows Down, Reviving Rate Hike Hopes

Australia's inflation rate slowed down more than expected in July, according to data from the Australian Bureau of Statistics (ABS). The Consumer Price Index (CPI) rose 3.5% in the 12 months to July, down from 3.8% in June. This unexpected decline has revived hopes for another interest rate hike by the Reserve Bank of Australia (RBA).

The largest contributors to annual inflation were Housing (+5.0%), Food and non-alcoholic beverages (+3.2%), and Recreation and culture (+2.6%). The trimmed mean inflation, which is a measure that excludes volatile items, was also 3.6%, unchanged from June.

NAB and Westpac forecasted a decline in annual inflation to 3.3% in the year to July, while CBA and ANZ predicted a sharper fall to 3.2%. The RBA's target band for inflation is between 2-3%.