Inflation Eases to 3.8%, But Will RBA Hike Rates Anyway?

The Reserve Bank of Australia (RBA) is facing a crucial decision on interest rates after inflation eased for the third month in a row, falling to 3.8 per cent in June.

New data from the Australian Bureau of Statistics shows that household energy costs climbed 22.4 per cent over the year due to government rebates ending, contributing significantly to annual inflation.

RBA Governor Michele Bullock warned that if inflation doesn't come down, the board will raise interest rates, but she also noted that policymakers must balance inflation risks against signs of a slowing economy and rising unemployment.

The banks' economists predict a hold in the cash rate for the August meeting, with some forecasters changing their predictions following the CPI data.