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Investing.com-- Australian consumer price index inflation cooled more than expected in the second quarter of 2025, lending more credence to expectations that the Reserve Bank will cut interest rates further.
CPI inflation rose 0.7% quarter-on-quarter in Q2, less than expectations of 0.8%, data from the Australian Bureau of Statistics showed on Wednesday.
CPI rose 2.1% year-on-year in Q2, in line with expectations but lower than the 2.4% seen in the first quarter.
Underlying inflation, as represented by trimmed mean CPI, rose 2.7% in Q2 as expected, easing from the 2.9% seen in the prior quarter. But the figure grew slightly less than expected on a q-o-q basis.
Inflation cooled substantially in June, with a monthly CPI indicator showing a y-o-y print of 1.9%, less than expectations that it would remain steady at 2.1%.
Easing rent and insurance costs helped spur a lower inflation reading, although higher food and electricity prices still kept inflation relatively underpinned.
Still, signs of cooling inflation give the RBA more headroom to cut interest rates. The central bank had unexpectedly left rates unchanged in July, citing the need for more clarity on Australian inflation, especially in Q2.
The ABS will later this year begin releasing a more detailed monthly CPI indicator, amid calls from the RBA for more clarity on inflation. RBA Governor Michele Bullock said that the central bank did not cut rates in July because it was waiting for the Q2 CPI print.