- The Australian monthly consumption price index is expected to remain stable at 2.1%.
- The quarterly CPC inflation is expected to have decreased modestly in the second quarter.
- The Australian Reserve Bank maintained the official cash rate (OCR) at 3.85% at its May meeting.
- The Australian dollar is expected to register lower minimums in front of its American rival.
Australia will publish inflation updates on Wednesday, two weeks before the monetary policy meeting of the Bank of the Australian Reserve (RBA), scheduled for August 11 and 12. The Australian Statistics Office (ABS) will publish two different inflation indicators: the quarterly consumption price index (CPI) for the second quarter of 2025 and the monthly IPC of June, which measures annual price pressures during the last 12 months. The quarterly report includes the middle IPC trimmed from the RBA, the favorite inflation indicator of policy formulators.
The Official Cash rate (OCR) of the RBA is 3.85% after the policy formulators delivered two rate cuts of 25 basic points (BPS) during the first half of the year.
Before the announcement, the Australian dollar (AUD) is quoted around the 0.6500 brand against its American rival.
What to expect from the numbers of the Australian inflation rate?
The ABS is expected to report that the monthly CPC increased by 2.1% in the year until June, matching May reading. The quarterly IPC is expected to increase 0.8% intertrimestral (QOQ) and 2.2% year -on -year (yoy) in the second quarter of 2025. In addition, the preferred indicator of the Central Bank, the middle CPI cut cut from the RBA, increases a 2.7% interannual in the same quarter, decreasing from the advance of 2.9% recorded in the first quarter.
Finally, it is predicted that the average RBA IPC increases 0.7% intertrimestral, matching its previous quarterly reading. As in the first quarter, the figures will be within the objective of the RBA to maintain inflation between 2% and 3%, which means that the Central Bank could make additional cuts of interest rates in the predictable future.
The RBA statement on monetary policy published after the July meeting shows that officials are still concerned about the global commercial conflict initiated by the United States (USA). While they consider that the worst will probably be avoided, it remains a source of uncertainty.
In addition, most of the officials “believed that reducing the cash rate for the third time in the course of four meetings would be unlikely that it was consistent with the strategy of flexible monetary policy in a cautious and gradual way to achieve the objectives of inflation and full employment of the Council. Although the flow of recent data has been generally in line with the previous forecasts, they judged that some data had been slightly stronger than expected.
However, “a minority of members judged that there was a case to reduce the objective of the cash rate at this meeting. These members gave more weight to the downward risks for economic perspectives, derived from a probable deceleration of growth abroad and the moderate rhythm of GDP growth in Australia.”
These concerns are real, considering that the ABS reported that the Australian economy expanded 0.2% in the three months until March 2025, below the 0.6% recorded in the last quarter of 2024 and without complying with the expectation of 0.4%. In a positive note, annualized growth remained at 1.3%, although it did not meet the estimates of a 1.5%increase.
At the same time, labor costs are a source of concern. According to the most recent information available, salary inflation increased by 3.4% in the year until March, and 0.9% in the first quarter of the year.
The warm growth combined with the upward risks of inflation in the midst of labor costs that grow at a faster rate than the RBA inflation target leaves the policy formulators between the sword and the wall. Although additional interest cuts before the end of the year are still on the table, the most likely scenario will be another decision to keep the fees in August.
Meanwhile, concerns about the impact of the trade war of US President Donald Trump continue to decrease. The US announced agreements with Japan and the European Union in recent days, while advancing in conversations with China. As a result, the US dollar (USD) shot throughout the foreign exchange market, which led to the aud/USD to fall to 0.6500, its lowest level in two weeks.
How could the Aud/USD consumer price index affect the consumer index?
In advance inflation readings would not have a real impact on the next decision of the RBA, while the decrease in price pressures should support the waiting position of officials. However, the highest inflationary pressures of the anticipated could lead to policy formulators to make an earlier interest rates.
As mentioned above, the Aud/USD pair fights around 0.6500 before the announcement, under pressure in the general strength of the USD from the advertisements of commercial agreements.
Valeria Bednarik, chief analyst of FXSTERET, says: “The aud/USD torque continues Aud/USD falls to the price zone of 0.6390. “
Bednarik adds: “The aud/USD torque could be fired if the inflation results are online or below the anticipated, but with the persistent demand of USD, the increase could be ephemeral. The simple mobile average (SMA) of 20 days provides dynamic resistance around 0.6545, while additional gains expose July peak in 0.6625.”
Inflation – Frequently Questions
Inflation measures the rise in prices of a representative basket of goods and services. General inflation is often expressed as an intermennsual and interannual percentage variation. The underlying inflation excludes more volatile elements, such as food and fuel, which can fluctuate due to geopolitical and seasonal factors. The underlying inflation is the figure on which economists focus and is the objective level of central banks, which have the mandate of maintaining inflation at a manageable level, usually around 2%.
The consumer price index (CPI) measures the variation in the prices of a basket of goods and services over a period of time. It is usually expressed as an intermennsual and interannual variation. The underlying IPC is the objective of the central banks, since it excludes the volatility of food and fuels. When the underlying IPC exceeds 2%, interest rates usually rise, and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually translates into a stronger currency. The opposite occurs when inflation falls.
Although it may seem contrary to intuition, high inflation in a country highlights the value of its currency and vice versa in the case of lower inflation. This is because the Central Bank will normally raise interest rates to combat the greatest inflation, which attracts more world capital tickets of investors looking for a lucrative place to park their money.
Formerly, gold was the asset that investors resorted to high inflation because it preserved their value, and although investors often continue to buy gold due to their refuge properties in times of extreme agitation in the markets, this is not the case most of the time. This is because when inflation is high, central banks upload interest rates to combat it. Higher interest rates are negative for gold because they increase the opportunity cost to keep gold in front of an asset that earns interest or place money in a cash deposit account. On the contrary, lower inflation tends to be positive for gold, since it reduces interest rates, making bright metal a more viable investment alternative.
Economic indicator
Consumer Price Index (MOM)
The consumer price index published by the Bank of the Australian Reserve (RBA) and reissued by the Australian Statistics Office It is a measure of the evolution of prices by comparing retail prices of a basket of representative purchase of goods and services. The purchasing power of the AU is dragged by inflation. The CPI is a key indicator to measure inflation and changes in purchase trends. A high reading is considered positive (or bullish) for the AUD, while a low reading is considered negative (or bassist).
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Next publication:
LIE Jul 30, 2025 01:30
Frequency:
Monthly
Dear:
2.1%
Previous:
2.1%
Fountain:
Australian Bureau of Statistics
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
