It has been a big week with the release of fresh inflation figures for the June quarter, ahead of the Reserve Bank’s August Board meeting this week.
Inflation continued to accelerate with annual headline inflation rising to a near 32-year high of 6.1%. Underlying inflation, which tries to reduce the impact of temporary and volatile price changes, rose to a record high of nearly 5%.
Whilst inflation has accelerated sharply since hitting a trough in 2020, the peak in annual inflation is still to come. We expect annual headline inflation to peak late this year at 7-7.5%.
The prospect of higher annual inflation over the rest of this year means that the Reserve Bank will have its foot ready to tap on the brakes again. We continue to expect the Reserve Bank to deliver another 50 basis points next week, taking the cash rate to 1.85%.
Read more on the RBA’s cash rate decision.
Download – BT Economics Special: Reserve Bank, fighting inflation a high priority.
For more on inflation and the RBA, please see our short video via the link below:
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