Australia's consumer price index rose 3.5% in the year to July, down from 3.8% in June but smaller than economists had predicted, the Australian Bureau of Statistics reported. The Reserve Bank's preferred measure of underlying inflation, the trimmed mean, held steady at 3.6%, offering no reassurance that price pressures are easing across the economy.

Prices for essential purchases — food, shelter, healthcare and school fees — rose 3.7% annually, outpacing wage growth of 3.2% and deepening cost-of-living pressure on households. Labour-intensive services surged, with childcare up 7.3%, hairdressing up 4.4%, education up 4.8% and meals out up 4.5%. Lower electricity prices, down from 22.4% annual growth in June to 6.1% in July due to rebate timing, drove most of the headline easing.

The Reserve Bank kept the cash rate at 4.35% earlier this month, warning that inflation remains too high. Financial markets expect no change at the bank's September 29 meeting, but are pricing in the possibility of another increase later this year, particularly if inflation remains sticky when September quarter figures are released before the November 3 board meeting, John Hawkins reports for The Conversation.