The consumer price index (CPI), measuring inflation, increased 1.0% over the three months ended June and 3.8% over the 12 months leading up to last month.

That's in line with the RBA's forecasts and predictions put forward by the majority of economists at the major banks.

The read will likely ease the mind of the RBA board, which will meet next week to discuss whether another cash rate hike is needed to tame inflation in the economy.

The news may also bring some peace of mind to embattled mortgage holders, who have already suffered through 13 rate hikes since mid-2022.

Economists at many of the big four banks previously noted an inflation read showing 1.1% quarterly growth, or more, could force the RBA board's hand when it meets next week.

"The June quarter rise is the same as the 1.0% rise in the March 2024 quarter," ABS head of prices statistics Michelle Marquardt said.

"The annual rise of 3.8% for the June quarter is up from 3.6% in the March quarter. This is the first increase in annual CPI inflation since the December 2022 quarter."

The biggest drivers of inflation over the quarter just been were housing costs (rents +7.3%, new dwellings purchased by owner-occupiers +5.1%) and the price of food and non-alcoholic beverages (+3.3%).

"The continuing tight rental market and low vacancy rates caused rental prices to go up 2.0% for the quarter, following a 2.1% rise in the March 2024 quarter," Ms Marquardt said.

The RBA board will come together on Monday and, over the course of two days, discuss holding or changing the cash rate - a major influence on interest rates.

Its decision will be announced on Tuesday afternoon, with RBA governor Michele Bullock fronting the press shortly afterward.

Homeowners hopeful of a cash rate hold

No doubt many homeowners will be hoping the central bank will hold the cash rate.

Particularly, as one in four mortgage-holders has less than $5,000 in savings, according to 1,000 Australians surveyed for InfoChoice's State of Aussies' Savings report.

If a 25 basis point hike were to be passed on by lenders, it could drive the average variable rate on a new owner-occupied home loan to 6.55%.

Such a rate would see weekly repayments on a $500,000 home loan increase by more than $20 to nearly $795.

Non-administered inflation already nearing target: ANZ

According to research from ANZ, when prices that are indexed to inflation or administered by governments are stripped out of the CPI picture, inflation is already close to the RBA's target band.

Such administered costs include the likes of healthcare, utilities, public transport, education, and childcare.

Non-administered costs were found to have lifted just 3.3% over the year to the March quarter, while seasonally-adjusted non-administered and non-indexed inflation over the two quarters leading up to the March quarter came out at 2.4% annualized.

"The RBA can do little to influence inflation on indexed or administered goods and services without long lags," ANZ senior economist Blair Chapman said.

"The RBA could raise the cash rate to slow inflation more sharply across the rest of the CPI basket … but this would likely slow activity in interest rate-sensitive sectors, slow employment growth, and add to unemployment.

"We think the RBA will look through some of the inflation it can't 'control' even if the [June quarter] CPI prints a little above the RBA's forecasts and see the board holding the cash rate steady at 4.35% at its August meeting."

Image by Eduardo Soares on Unsplash

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