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RBA Governor Michele Bullock is set to face pressure over the inflation target. Picture: Christian Gilles \/ NewsWire<\/p>\n
Aussie households have been hit with another financial shock, as inflation comes roaring back, crushing hopes for more rate cuts, with at least one now off the table for the Reserve Bank.<\/p>\n
Australian Bureau of Statistics found the monthly Consumer Price Index (CPI) jumped 2.8 per cent in the year to July 2025, hitting the extreme end of the RBA\u2019s 2-3pc inflation target band.<\/p>\n
ABS head of prices statistics Michelle Marquardt said \u201cthis is the highest annual inflation rate since July 2024, following several months of easing inflation\u201d.<\/p>\n
MORE: Shock social media money trends fooling Aussies<\/a><\/p>\n \u2018No excuse\u2019: Banks slammed for refusing rate cut<\/a><\/p>\n All groups monthly CPI indicator. Source: ABS<\/p>\n The move is a sharp rise from its 1.9pc level in June, an increase which puts fresh pressure on the Reserve Bank to keep its options open to even raise rates if needed.<\/p>\n One of the biggest segments that rose were housing costs, up 3.6 per cent in the past 12 months, outpacing surges in food and non-alcoholic drinks (3pc), though alcohol and tobacco put on a large 6.5pc increase.<\/p>\n But the biggest spike was a massive 13.1pc surge in electricity prices over the past year, skyrocketing 13pc in July alone after New South Wales and Australian Capital Territory homes did not receive their usual Energy Bill Relief Fund payments that month. <\/p>\n MORE: Secret \u2018free\u2019 master key unlocking Aussie doors for decades<\/a><\/p>\n Big Aus bank slashes rate lower than RBA call<\/a><\/p>\n The number of rate cuts ahead may be in doubt now for 2025.<\/p>\n Underlying inflation which strips out volatile categories like fuel and holiday travel was also flashing red, according to the data, up 3.2 per cent in July compared to a 2.5pc increase the month before.<\/p>\n Another closely watched measure \u2013 trimmed mean inflation \u2013 also climbed from 2.1pc to 2.7pc, which could mean price pressure is becoming widespread.<\/p>\n \u201cAnnual trimmed mean inflation was 2.7 per cent to July 2025. This was up from 2.1 per cent inflation to June and similar to the rate that we saw three months ago,\u201d Ms Marquardt said.<\/p>\n MORE: NRL gun\u2019s quiet $1.1m side hustle<\/a><\/p>\n Big Aus bank slashes rate lower than RBA call<\/a><\/p>\n New dwellings and rent annual movement. Source: ABS<\/p>\n Belinda Allen, head of economics for Australia\u2019s biggest bank CommBank, said the RBA minutes for August had shifted the focus from CPI to the labour market \u2013 with a September rate cut now off the table.<\/p>\n \u201dUpside risks to inflation have now been superseded by potential downside risks to the labour market,\u201d she said.<\/p>\n \u201cA further 25bp rate cut in November looks locked in, an earlier rate cut in September is unlikely and would only occur if labour market data deteriorated significantly.\u201d<\/p>\n Ms Allen said the RBA August Minutes showed much of the board\u2019s 2025 focus was on ensuring inflation returned sustainably to the mid\u2011point of its target band.<\/p>\n MORE: Shock $234m peanut butter crunch hits Aus farms<\/a><\/p>\n<\/p>\n
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