Inflation Drop Fuels Hope for Rate Hold, But Experts Warn It's Too Early to Celebrate

A surprise drop in inflation has given millions of mortgage holders hope that interest rates will remain on hold. According to new data from the Australian Bureau of Statistics (ABS), the Consumer Price Index (CPI) rose by 3.8% in June, slightly lower than the headline inflation of 4.0% in May and 4.2% in April.

The Reserve Bank of Australia's (RBA) preferred measure of inflation, the trimmed mean, remained steady at 3.6%. The largest contributors to annual inflation were housing, which rose by 6.8%, and electricity costs, which climbed 22.4% over the year.

While a rate hold would provide relief for households, some experts warn that it's still too early to celebrate. RBA governor Michele Bullock has warned that if inflation doesn't come down, the board will raise interest rates further.