Summary
US July CPI rose 3.4% year-on-year and 0.1% month-on-month — both results in line with Dow Jones consensus forecasts; core CPI (excluding food and energy) rose 2.5% annually and 0.2% monthly, both down 0.1 percentage point from June; the readings indicate the energy-fuelled burst from the Middle East conflict is easing. These insights are crucial as we monitor the US CPI July 2026.
The softer CPI reduces the urgency for a September Fed hike — but does not remove it; the Fed still has jobs and CPI data for August to digest before its 16 September decision; markets continue to price one to two hikes by year-end
A softer USD following the CPI is broadly supportive for the AUD — with the RBA’s hawkish hold still fresh and commodity export earnings running above forecast, the AUD has solid support near current levels
Wednesday’s US inflation data delivered the result most in the market were hoping for — nothing dramatic, nothing alarming. US CPI for July came in exactly where forecasters expected, confirming that the worst of the energy price spike from the Middle East conflict is passing.
For Australians and New Zealanders with financial ties to the United States — sending money for university fees, mortgage payments, family support or business — the direction of US inflation matters. It drives the Fed’s rate decisions, which in turn drive the USD, which determines how many US dollars your AUD or NZD buys.
What the data showed
Released: Wednesday 12 August 2026, 8:30am ET (10:30pm AEST)
Headline CPI:
- Month-on-month: +0.1% (seasonally adjusted) — up from -0.4% in June
- Year-on-year: +3.4% — down from 3.5% in June
- In line with consensus forecast
Core CPI (excluding food and energy):
- Month-on-month: +0.2%
- Year-on-year: +2.5% — down 0.1 percentage point from June
- In line with consensus forecast
Key drivers:
- Shelter rose 0.1% in July — accounting for roughly two-thirds of the monthly all-items increase
- Food rose 0.1% over the month
- Energy prices eased from recent highs, dragging headline inflation lower
Troubling signal: US inflation at 3.4% remains above wage growth, which is running at 3.2% annually. Real wages are still negative — Americans are losing purchasing power in real terms.
What it means for the Federal Reserve
The Fed next meets on 16 September 2026. The July CPI result was in line with expectations — it neither accelerates a September hike nor definitively removes it.
The case for a September hike (still alive):
- Core inflation at 2.5% is still above the 2% target
- Three FOMC members dissented in July in favour of an immediate hike
- Chair Warsh has been explicit: “not a pause”
- One more jobs report and one more CPI (August data, released 11 September) before the September meeting
The case for a hold (strengthening):
- Two consecutive months of subdued monthly CPI (+0.1% in July, -0.4% in June)
- Energy price easing reducing the oil shock pass-through
- Real wages still negative — economy is self-correcting
The consensus among analysts: the September decision remains live, but a hold is slightly more likely than a hike given the two consecutive soft monthly readings. The August CPI (due 11 September — five days before the Fed meeting) is now the decisive input.
What it means for AUD/USD and NZD/USD
Softer US CPI = less USD strength = AUD/USD and NZD/USD support.
When US inflation surprises to the downside, investors price a lower probability of Fed hikes — which reduces the yield advantage of USD assets and allows other currencies to strengthen or hold steady.
The AUD was at 0.7056 (as at 4pm AEST 11 August) heading into the CPI. A softer-than-feared result removes one potential USD-strengthening catalyst near-term. With the RBA’s hawkish hold still fresh and commodity export earnings running above forecast, the AUD has solid underlying support.
For Australians sending money to the USA: A broadly stable AUD/USD at 0.70+ is favourable compared to the 0.64 average of 2025. The AUD has appreciated approximately 10% against the USD over the past 12 months — meaning your dollar currently buys significantly more USD than it did a year ago.
Key upcoming dates for AUD/USD direction:
| Date | Event | Impact |
|---|---|---|
| 26 August | Australia July CPI | RBA November hike probability |
| 27-29 August | Jackson Hole | Fed Chair Warsh sets tone for September |
| 11 September | US August CPI | Decisive input for September Fed |
| 16 September | Federal Reserve decision | USD direction |
What it means for your transfers
A softer US CPI reduces pressure on the Fed to hike in September — which eases USD strength and supports the AUD and NZD near current levels. For Australians and New Zealanders sending money to the United States for university fees, mortgage payments, family support or business, the current AUD/USD rate near 0.7056 is significantly better than the 0.64 average of 2025.
OrbitRemit supports AUD and NZD to USD transfers at a flat AUD/NZD $4 fee, with no exchange rate markup and the rate locked at confirmation. Use the rate alert feature to set a target AUD/USD or NZD/USD rate and receive a notification the moment it is hit.
FAQs (frequently asked questions)
What was the US CPI in July 2026?
3.4% year-on-year (down from 3.5% in June). Core CPI was 2.5% annually. Both results were in line with consensus forecasts.
Will the Fed raise rates in September 2026?
Uncertain. The July CPI was in line with expectations — not hot enough to force a hike, not soft enough to rule one out. The August CPI (due 11 September, five days before the Fed meeting) is the decisive input. Markets price one to two hikes by year-end.
How does US inflation affect the AUD?
Higher US inflation raises Fed hike expectations, which strengthens the USD and puts downward pressure on AUD/USD. Softer inflation reduces hike urgency, supporting the AUD. Wednesday’s in-line result was broadly neutral to mildly AUD-supportive.
How much does it cost to send money from Australia to the USA?
AUD $4 flat fee with OrbitRemit. Fee-free above AUD $10,000. Check current AUD/USD rates at orbitremit.com.
This article is based on BLS official CPI data released 12 August 2026 and analyst commentary. Exchange rates fluctuate — check current rates at orbitremit.com before transferring. Last updated 14 August 2026.
Sources: Bureau of Labor Statistics — Consumer Price Index July 2026 (bls.gov, 12 August 2026) | CNBC — CPI inflation report July 2026: Prices rose 0.1%, annual rate 3.4% (12 August 2026) | NBC News — July 2026 CPI report: Inflation remained stubborn (12 August 2026)
