Australia Q2 Inflation Rate Below Forecasts

Australia’s annual inflation rate dropped to 2.1% in Q2 2025 from 2.4% in the prior two periods, marking its lowest figure since Q1 2021 and falling short of market forecasts of 2.2%.

Services inflation hit its lowest in three years (3.3% vs 3.7% in Q1), due to slower rises in insurance and rent costs.

Goods inflation also eased (1.1% vs 1.3%), driven by a 10% fall in automotive fuel prices and a notable moderation in cost of new dwellings.

Prices also softened for food (3.0% vs 3.2%), alcohol and tobacco (5.7% vs 6.5%), clothing (1.2% vs 1.7%), insurance and financial services (3.1% vs 3.8%), and education (5.5% vs 5.7%).

At the same time, transport cost fell further (-2.6% vs -1.0%).

In contrast, inflation remained unchanged for housing (at 2.0%), health (at 4.1%), and recreation (at 1.7%), but accelerated for household services (1.0% vs 0.7%).

The RBA’s trimmed mean rose 2.7% yoy, matching consensus but slowing from 2.9% in Q1.

It also pointed to the lowest print since Q4 2021.