Australia Inflation Expectations Retreat from 2-Year High

Consumer inflation expectations in Australia eased to 4.7% in July 2025 from June’s two-year peak of 5.0%, suggesting a more balanced outlook for inflation risks amid continued labor market strength. Still, it’s unclear whether this shift signals a lasting trend. In Q1 2025, annual inflation held steady at 2.4%—a four-year low—unchanged for the third consecutive quarter. Meanwhile, the trimmed-mean CPI, the Reserve Bank of Australia’s preferred core measure, stood at 2.9%, the lowest since late 2021 but still above the RBA’s 2–3% midpoint target. In May, monthly CPI rose 2.1% year-on-year, the softest pace since October 2024. The RBA has signaled it will wait for more data before deciding whether inflation is firmly on track to sustainably return to its 2.5% target.