Australia’s inflation pressures remained elevated in July, with the trimmed mean consumer price index rising 0.5% month-on-month, according to ANZ Research. The increase exceeded both ANZ’s forecast and market expectations of a 0.3% gain, matching the highest monthly rise recorded in the series, which was previously seen in July 2025.
The three-month annualised trimmed mean inflation rate climbed to a record 4.7%, while the share of the CPI basket with price increases exceeding 3% surged to 61%. These figures suggest broader and more persistent inflationary pressures than anticipated. ANZ noted that upside surprises were concentrated in discretionary spending categories, including clothing and footwear, restaurant meals, furnishings, and domestic holiday travel. Food prices, by contrast, showed limited signs of second-round inflation effects.
The Reserve Bank of Australia (RBA) held its cash rate steady at 4.35% at its August meeting but left the door open to further tightening if inflation fails to moderate. ANZ now views a November policy meeting as a potential catalyst for another rate hike, revising its outlook to reflect stronger-than-expected household demand. The bank had previously expected an average quarterly rise of 0.8% in inflation over the second half of the year, but July’s data has prompted a reassessment of the demand backdrop.
ANZ highlighted July’s household spending indicator as a key test of consumer appetite, with the latest figures suggesting that domestic demand may not be as weak as previously assumed. The RBA’s next policy meeting is scheduled for September 28–29, with markets closely monitoring incoming data for signs of sustained inflationary pressures.
