Australia Inflation Expectations Highest in 2 Years

Consumer inflation expectations in Australia jumped to 5.0% in June 2025 from 4.1% the previous month, marking the highest level since July 2023.

The latest reading suggests that while underlying inflation has returned to the Reserve Bank of Australia's (RBA) 2–3% target range, headline inflation is expected to climb toward the upper end of that band as energy subsidies are phased out.

Meanwhile, labor and product markets remain tight, keeping pressure on prices.

The central bank recently flagged uncertainty around global trade policy, warning that many scenarios could dampen economic activity and inflation, with some potentially having a large impact.

Australia's annual inflation held steady at 2.4% in Q1 2025, marking a four-year low and maintaining that level for three straight quarters.

However, the trimmed-mean CPI — a key core inflation measure — was at 2.9%, its lowest since late 2021 but still above the RBA’s target midpoint.