Inflation Drop Brings Relief for Homeowners

Homeowners in Australia may have some relief on their mortgage payments as inflation unexpectedly dropped to 3.8% in June, down from 4% in May.

The decrease in the consumer price index (CPI) could give the Reserve Bank of Australia (RBA) a reason to keep the cash rate at 4.35%, which was set in June after three consecutive hikes earlier this year.

According to Mathew Tiller, group head of research at LJ Hooker, the drop in inflation is 'a relief' but 'no guarantee on the RBA's decision.'

The RBA will consider the inflation rate when deciding on the cash rate at its meeting on August 11.

Underlying inflation, or trimmed mean inflation, held steady at 3.6% in June and has not dropped into the RBA's target range of between 2 and 3% for about a year.