Australia’s CPI inflation cools to 3.8% YoY in June vs. 4% forecast

FXStreet · 2026-07-28T22:30:00Z
Australia’s CPI inflation cools to 3.8% YoY in June vs. 4% forecast

Australia’s Consumer Price Index (CPI) increased by 3.8% year-over-year (YoY) in June, compared to a 4% growth reported in May, the latest data published by the Australian Bureau of Statistics (ABS) showed on Wednesday.

The market forecast was a 4% print for the reported period. 

The monthly Consumer Price Index dropped by -0.1% in June, compared to the previous reading of a 0.7% decrease, beating the estimated 0.2% increase.

The quarterly RBA Trimmed Mean CPI for June rose 0.8% and 3.6% on a monthly and an annual basis, respectively. Meanwhile, the Trimmed Mean CPI advanced 0.3% MoM in June. Annually, the Trimmed Mean CPI rose 3.6% YoY during the same period.

AUD/USD reaction to Australia's Consumer Price Index data

The Australian Dollar (AUD) sees fresh selling following Australia's CPI report. The AUD/USD pair is down 0.29% on the day to trade at 0.6954 at the press time.

Australian Dollar Price Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Japanese Yen.

USD EUR GBP JPY CAD AUD NZD CHF
USD -0.02% 0.02% -0.07% -0.05% 0.32% 0.04% -0.04%
EUR 0.02% 0.04% -0.04% -0.03% 0.36% 0.05% -0.02%
GBP -0.02% -0.04% -0.07% -0.06% 0.32% 0.02% -0.05%
JPY 0.07% 0.04% 0.07% 0.02% 0.40% 0.07% 0.02%
CAD 0.05% 0.03% 0.06% -0.02% 0.37% 0.07% 0.00%
AUD -0.32% -0.36% -0.32% -0.40% -0.37% -0.29% -0.35%
NZD -0.04% -0.05% -0.02% -0.07% -0.07% 0.29% -0.06%
CHF 0.04% 0.02% 0.05% -0.02% -0.01% 0.35% 0.06%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

This section below was published on July 28 at 22:30 GMT on Tuesday as a preview of Australia’s CPI inflation report. 

  • Australian Consumer Price Index seen steady at 4% YoY in June.
  • The Trimmed Mean CPI will impact the next Reserve Bank of Australia interest rate decision.
  • The Australian Dollar trades with a neutral stance against its American rival.

The Australian Bureau of Statistics (ABS) will publish the June Consumer Price Index (CPI) on Wednesday at 01:30 GMT. The report is expected to show that inflation rose 4% from a year earlier, matching the May reading. The monthly CPI is foreseen at 0.2% following the -0.7% print from May.

The ABS will also release the Trimmed Mean CPI, the Reserve Bank of Australia’s (RBA) favorite inflation gauge. The annual figure is expected to print at 3.7%, higher than the previous reading of 3.6%, while on a monthly basis the Trimmed Mean CPI is also forecast to remain unchanged at 0.4%.

Ahead of the announcement, the Australian Dollar (AUD) hovers around 0.6950 vs the US Dollar (USD), with the latter strengthening on demand for safety.

What to expect from Australia’s inflation rate data?

Inflation data is a critical factor in the RBA’s monetary policy decisions, and according to Governor Michele Bullock, “it is still too high.”

The RBA met in June, and the Board decided to leave the cash rate target unchanged at 4.35%, after hiking rates three times so far in 2026. The accompanying statement showed that policymakers acknowledged that disruption to global Oil supply is having an impact on inflation, and that the latter picked up “materially” in the second half of 2025 — that is, before the current Middle East war.

Geopolitical tensions escalated in mid-July and eased by the end of the month, yet the crisis remains. Transit through the Strait of Hormuz is limited after the United States (US) and Iran exchanged attacks over the last two weeks. While crossfire has paused, the critical sea strait is closed to most traffic. Oil prices are off their monthly peaks, but a barrel of West Texas Intermediate (WTI) trades at around $80, while the barrel of Brent changes hands at $84, maintaining speculative interest in cautious mode.

Confidence has also been eroded ahead of the Australian CPI amid a sharp decline in global stocks. Once again, concerns revolved around potential returns from massive AI investment.

No peace progress in the Middle East is the main inflationary factor these days, and there’s little central banks can do. The RBA understands a tighter monetary policy this year has helped slow consumption spending, but also that uncertainty about the outlook remains high, and that, even if the war ends in the near term, something quite unlikely, global supply issues will take some time to resolve, hence maintaining upward pressure on global energy prices and inflation.

Additionally, the US Federal Reserve (Fed) is scheduled to announce its decision on monetary policy later on Wednesday. The Fed is widely anticipated to keep interest rates on hold at 3.75%, although Chair Kevin Warsh is expected to retain a certain hawkish tone. Warsh has made a point against forward guidance, yet market players will still be looking for clues about what the central bank may do when it meets again in September.

How could the Consumer Price Index report affect AUD/USD?

Annual Australian CPI peaked at 4.6% YoY in March and eased toward 4% in May. Given that the war paused in June, most major economies reported lower-than-anticipated inflation in the month, and that should be the case in Australia.

A reading in line with expectations and the previous 4% should have no material impact on the AUD/USD pair. Anything above that level should boost speculation for additional rate hikes, resulting in a stronger Aussie, at least in the near-term.

On the contrary, a softer-than-anticipated outcome, and especially given AUD/USD's current bearish tone, should push the pair sharply lower in the near term, as the focus quickly returns to war-related headlines and the upcoming Fed announcement.

Valeria Bednarik, FXStreet Chief Analyst, notes: “From a technical point of view, the AUD/USD is neutral. For the last two weeks, the pair has been confined to a tight range, finding buyers around 0.6950 and quickly retreating on spikes beyond the 0.7000 figure. The daily chart reflects the ongoing absence of directional strength, as the pair barely holds above a mildly bullish 20-day Simple Moving Average (SMA) currently near the base of the aforementioned range. The 100-day SMA lies flat in the 0.7050 region, while the 200-day SMA grinds marginally higher around 0.6900. Technical indicators, in the meantime, turned marginally lower around their midlines, failing to provide clear directional clues.”

Bednarik adds: “The AUD/USD pair would need to clear the 0.7030 region to be able to extend its run toward the 0.7070 price zone. Once beyond the latter, next resistance lies at the 0.7100 figure. Support can be found at 0.6950 and 0.6900, with a break below the latter opening the door for a steeper decline.”

RBA FAQs

The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.

While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.

Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.

Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.

Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.