Australia’s consumer price inflation accelerated sharply to 2.8% annually in July 2025, according to the Australian Bureau of Statistics (ABS), representing a substantial increase from June’s 1.9% and marks the highest inflation rate in twelve months.
The July inflation spike was primarily driven by electricity price movements linked to the timing of government energy bill relief programs. Households in New South Wales and the Australian Capital Territory did not receive their extended Commonwealth Energy Bill Relief Fund rebates in July—these payments were delayed until August, resulting in higher out-of-pocket electricity costs.
Key Takeaways from Australia’s July CPI Report
- Headline inflation jumped to 2.8% in July from 1.9% in June, the highest rate since July 2024
- Electricity prices surged 13.1% annually, compared to a 6.3% decline in the previous month
- Core inflation measures also rose: CPI excluding volatile items reached 3.2% (up from 2.5%), while the annual trimmed mean increased to 2.7% (from 2.1%)
- Housing costs remained the largest contributor at 3.6%, followed by food and beverages at 3.0%
- Rental price growth continued to moderate, slowing to 3.9% annually—the lowest rate since November 2022
Link to Australia’s Consumer Price Index (July 2025)
The ABS noted that excluding government rebates, electricity prices would have risen 23.0% since June 2023, compared to 13.8% including the rebates.
More encouraging was the continued moderation in rental price growth, which fell to 3.9% annually—down from 4.2% in June and representing the slowest pace since late 2022. The ABS attributed this to stable vacancy rates across most capital cities, suggesting some easing in housing market pressures.
Food and beverage inflation remained elevated at 3.0%, driven by higher prices for fruit and vegetables (4.8%), eggs (18.0%), and coffee-related products (14.4%). Transport costs provided some relief, with automotive fuel prices falling 5.5% annually.
Market Reaction
Australian Dollar vs. Major Currencies: 15-min
Overlay of AUD vs. Major Currencies Chart by TradingView
The Australian dollar rallied sharply across the board upon seeing the upbeat headline figures, which appeared to dash market expectations for another immediate RBA rate cut. Profit-taking appeared to follow, though, as traders digested the temporary nature of electricity-driven inflation.
AUD/JPY gained 0.37% while the AUD/NZD rallied 0.25% as the policy divergence with the RBNZ was highlighted. However, gains against the dollar were short-lived, as AUD/USD soon edged 0.13% lower a few hours after the Australian inflation print.
