Fuel excise will return to normal on Monday (3 August). Photo: David Murtagh.
Inflation eased last month more than anticipated, with the consumer price index rising 3.8 per cent in the 12 months to June, which is down from 4 per cent the previous month.
Most economists had forecast inflation to be higher.
Australian Bureau of Statistics data shows the largest contributor to annual inflation in June was housing, which rose by 6.8 per cent, with the next largest contributors being food and non-alcoholic beverages, and recreation and culture, which both rose by 3.3 per cent.
Annual housing inflation of 6.8 per cent in the 12 months to June reflects rising costs for electricity and new dwellings.
ABS head of price statistics Rachael McCririck said that looking through some of the bigger price movements, underlying inflation was steady at 3.6 per cent in the 12 months to June 2026, the same as in the 12 months to May.
“Electricity remains one of the biggest contributors to annual inflation, with costs 22.4 per cent higher than 12 months ago,” Ms McCririck said.
“This is largely because government rebates, which reduced household electricity bills, have ended.
“Annual inflation for new dwellings has reached its highest level in almost three years, at 5.8 per cent. This was driven by builders passing on higher material and labour costs.”
When prices for some items change significantly, she said, the trimmed mean (a statistical measure that removes a set percentage of the largest and smallest values from a dataset before calculating the final mean) can give more insights into how underlying inflation is trending without the impact of temporary shocks.
For example, automotive fuel has been excluded from the trimmed mean every month since March 2026 when the Middle East war hit fuel prices.
Annual inflation for transport has moderated, recording a 0.1 per cent rise, down from a 3.3 per cent rise in May.
This was driven by automotive fuel prices falling for three consecutive months between April and June 2026.
“Lower world oil prices as a result of some stabilisation in the Middle East in June contributed to fuel prices falling 10.9 per cent in the month,” Ms McCririck said.
“The Federal Government’s fuel excise relief measures, which contributed to lower automotive fuel prices in April and May, also remained in place.”
But Treasurer Jim Chalmers has confirmed the fuel excise discount will be gone by Monday (3 August).
The cut took 16 cents off each litre of fuel as a measure to ease the financial impacts of the Middle East war and fuel supply issues.
“That fuel excise relief will end midnight on Sunday and that’s because it has played a really important role helping to take some of the sting out of these cost-of-living pressures,” Dr Chalmers said.
“It was never the government’s intention for that to be permanent. We began to taper that off at the start of the month, deliberately, so that we could provide a bit more cost of living help.”
Speaking specifically on inflation, the Treasurer said that while the latest CPI figure is lower than was forecast, it remains higher than the Federal Government wants.
“This is the third consecutive month now where annual headline inflation has come down,” he said.
“It is an encouraging outcome that shows that we have made some progress on inflation since the budget… [but] we know that people are still under pressure.
“We know that inflation is still higher than we would like it to be. We know that the war in the Middle East and the uncertain developments, even in the last couple of weeks, risk that outlook as well.
“But in the circumstances that we find ourselves in, these numbers today are encouraging.”
The latest data has tempered forecasts for another Reserve Bank rate rise next month, with financial markets all but ruling it out.
Nevertheless, the Greens have used the data to repeat their call for a rent freeze for the next 12 months and a moratorium on no-cause evictions.
They point to housing costs driving inflation, with the cost of living remaining too expensive for Australian households.
“High inflation means that too many households are just one rent increase away from eviction or homelessness,” Greens housing spokesperson Barbara Pocock said.
“A rent freeze and ban on evictions will give people more security in a cost of living and fuel crisis. Households across the country are already doing it tough.”
Original Article published by Chris Johnson on Region Canberra.
