Inflation Eases to 3.8%: Good News for Australian Mortgage 2026

Inflation eased to 3.8% in the year to June, offering a lifeline to Australian mortgage holders as the Reserve Bank now appears less likely to raise interest rates next month. The latest consumer price index (CPI) data from the Australian Bureau of Statistics (ABS) showed a slight decline from 4% in the previous quarter, easing fears of another painful rate hike on August 11.

What the Latest Inflation Data Means for You

The ABS report, released Wednesday, revealed that underlying price pressures—the RBA's preferred measure—rose by just 0.8% in the June quarter, softer than anticipated. This brought the annual trimmed mean inflation to 3.6%, down from 3.5% but still above the central bank's 2.5% target. Crucially, the figure was below the RBA's own forecast of 3.8%, prompting independent economist Chris Richardson to declare, "Bullet now officially dodged."

For mortgage holders, this means the probability of a rate hike on August 11 has plummeted to just 4%, down from over 20% at the start of the day, according to Bloomberg data. The chance of a fourth rate hike this year also dropped below 50%, from 84%.

Why Inflation Is Cooling: Key Drivers

Several factors contributed to the easing inflation, including lower world oil prices in June, which reduced fuel costs for consumers. However, this trend may reverse in July due to the restart of the Iran war and the expiry of the government's 16-cent fuel excise discount.

• Fuel prices fell in June, helping lower the headline inflation rate.
• Underlying price pressures eased more than expected, signaling that RBA rate hikes are working.
• Middle East conflict had less impact on inflation than earlier feared.

Comparison: Inflation Trends (2023-2024)

While the fight against inflation isn't won yet, the current trajectory suggests the RBA may hold rates steady, providing much-needed relief to households struggling with high mortgage repayments.

Expert Insights and Market Reaction

Financial markets reacted swiftly to the data, with the implied probability of a rate hike next month plunging. "There's been growing evidence the RBA's rate hikes were starting to work in the fight against inflation," Richardson noted. "But, for now, it looks as if the RBA won't be raising rates on August 11."

For everyday Australians, the easing inflation offers a glimmer of hope, but economists warn that the battle is far from over. The RBA's official target remains 2.5%, and any resurgence in global oil prices or geopolitical tensions could derail progress.

Key Takeaways for Mortgage Holders

• Rate hike probability for August 11 has fallen to 4%, offering short-term relief.
• Underlying inflation is cooling, but still above the RBA's target.
• Fuel excise discount expiry may push inflation up in July.
• Monitor RBA announcements for future rate decisions.

FAQ

Stay informed with GrandGoldman.com for the latest updates on inflation, interest rates, and the Australian economy. If you're a mortgage holder, now is the time to review your budget and consider fixing your rate if you haven't already.