Summary
Australia’s CPI rose 3.5% in the 12 months to July 2026 — down from 3.8% in June — the easing was driven largely by lower fuel prices and the continued unwinding of earlier energy price spikes; housing remained the single largest contributor to annual inflation at 5.0%, with new dwelling costs rising 5.7% and rents up 3.6%. This data is crucial in understanding the broader economic context surrounding Australia CPI July 2026.
Trimmed mean inflation held at 3.6% — unchanged from June — the RBA’s preferred measure of underlying inflation did not ease as markets had hoped; this is the number that matters most for the November rate decision, and its stickiness keeps the hike case alive
The result was slightly hotter than market forecasts — the four major banks had forecast headline CPI of 3.2-3.3%; the 3.5% outcome was above consensus; trimmed mean at 3.6% was in line; the AUD received mild support as the stickier-than-expected result slightly lifted November hike probability
Australia’s monthly inflation data for July landed yesterday — and the picture it paints is one of gradual but incomplete disinflation. Headline inflation eased meaningfully, from 3.8% to 3.5%. But the trimmed mean — the measure that strips out volatile items and gives the cleanest read on underlying price pressure — did not move at all, holding at 3.6% for the second consecutive month.
For the RBA, that unchanged trimmed mean is the number that matters. And it was enough to keep the November hike case firmly on the table.
What the data showed
Released: Wednesday 26 August 2026, 11:30am AEST — ABS official
| Measure | July 2026 | June 2026 |
|---|---|---|
| CPI annual | 3.5% | 3.8% |
| Trimmed mean annual | 3.6% | 3.6% |
| Monthly CPI (seasonally adjusted) | +0.6% | -0.1% |
Largest contributors to annual inflation:
| Category | Annual change |
|---|---|
| Housing | +5.0% |
| New dwellings | +5.7% |
| Rents | +3.6% |
| Electricity | +6.1% |
| Food and non-alcoholic beverages | +3.2% |
| Meals out and takeaway | +4.5% |
| Recreation and culture | +2.6% |
ABS head of prices statistics Rachael McCririck: “Housing costs rose due to higher prices for new dwellings, which increased by 5.7% in the year to July as builders passed on higher material and labour costs.”
On electricity: The 6.1% annual electricity rise was largely due to the ending of government energy rebates — which had artificially suppressed electricity prices in the same period last year and are now rolling off the comparison base.
Why the trimmed mean matters more than the headline
The headline CPI of 3.5% looks encouraging — down from 3.8% and moving in the right direction. But the RBA has consistently flagged that it watches the trimmed mean more closely than headline CPI, because the trimmed mean strips out the most volatile items (fuel, electricity, fresh food) and gives a cleaner picture of underlying demand-driven inflation.
The trimmed mean at 3.6% for the second month running tells the RBA that underlying inflation has not yet resumed its downward journey. The question is whether this plateau reflects genuine stickiness or a temporary pause before further easing.
The RBA’s own forecasts (from the August Statement on Monetary Policy) project trimmed mean at 3.3% by Q4 2026 — meaning the July result is still running above the RBA’s own projected path. That is not a comfortable position for a board that has already considered hiking at its last two meetings.
What it means for the RBA November decision
The RBA next meets in November 2026. Today’s CPI result adds to a mixed picture:
The case for a hold in November:
- Headline CPI is easing — 3.5% is meaningfully lower than the 4.0%+ prints of early 2025
- Wage growth (WPI June: 3.2%) is running below both headline and trimmed mean — real wages still negative
- All four major banks forecast no further hikes in 2026
- The labour market is softening — unemployment rose to 4.5% in July
The case for a November hike (still alive):
- Trimmed mean unchanged at 3.6% — not moving toward the 2-3% target
- Housing inflation at 5.0% — rent and new dwelling costs show no sign of easing
- Meals out and takeaway at 4.5% — services inflation remains elevated
- The RBA’s own SMP forecasts are being exceeded on the trimmed mean
- Governor Bullock explicitly refused to rule out further hikes at the August press conference
The decisive input: Jackson Hole (tonight AEST, tomorrow US time) and the RBNZ September 2 decision will set the global rate context. The next Australian CPI is due 30 September — that will be the last major domestic inflation read before November.
What it means for the AUD
The result was slightly hotter than the 3.2-3.3% headline consensus — which provided mild AUD support. A stickier trimmed mean keeps the probability of a November RBA hike alive, and higher rate expectations attract foreign capital into AUD assets.
The AUD remains well-supported near 0.70+ against the USD — its highest level in three years — with the RBA’s 4.35% cash rate still elevated relative to most peers and commodity export earnings (iron ore, gold, LNG) running above forecast.
Key upcoming AUD catalysts:
- Jackson Hole — Warsh keynote Friday 28 August (tonight AEST)
- RBNZ rate decision — Tuesday 2 September
- Federal Reserve rate decision — Tuesday 16 September
- Next Australian CPI — Wednesday 30 September
FAQs (frequently asked questions)
What was Australia’s inflation rate in July 2026?
The CPI rose 3.5% in the 12 months to July 2026 — down from 3.8% in June. Trimmed mean inflation was unchanged at 3.6%.
What is the trimmed mean and why does the RBA use it?
The trimmed mean strips out the most volatile items from the CPI basket and gives a cleaner picture of underlying inflation. The RBA watches it more closely than headline CPI because it is less affected by one-off price swings in fuel and energy.
Will the RBA raise rates in November 2026?
The November decision remains genuinely uncertain. The unchanged trimmed mean at 3.6% keeps the hike case alive. All four major banks currently forecast a hold. The next CPI (30 September) is the most important remaining input before the November meeting.
When is the next Australian CPI release?
Wednesday 30 September 2026 at 11:30am AEST — covering the month of August 2026.
This article is based on ABS Consumer Price Index data released 26 August 2026. Exchange rates fluctuate — check current rates at orbitremit.com. Last updated 27 August 2026.
Sources: ABS — Consumer Price Index, Australia, July 2026 (abs.gov.au, released 26 August 2026) | ABS — Media release: CPI rose 3.5% in year to July 2026 (abs.gov.au) | IndexBox — Australia CPI Inflation Rate July 2026 (19 hours ago)
