Updated 19 August 2025
The Consumer Price Index (CPI) eased to 2.1% p.a. in the June 2025 quarter; headline inflation has been within the RBA’s target range for the fourth consecutive quarter since the pandemic.
Quarterly consumer price inflation rose by 0.7% in the June quarter 2025, resulting in an annualised inflation rate of 2.1%. This marks the lowest annual rate of inflation since the first quarter of 2021.
The RBA forecast CPI to rise to 3.1% by the June quarter 2025, before easing throughout 2026-2027. Treasury forecasts for the same period are lower.
The Trimmed Mean Inflation (TMI), which offers a better reading of underlying inflation by excluding volatile items, was 2.7% in June. This marks the second consecutive quarter in which both headline and underlying inflation have remained within the Reserve Bank's target band since 2021.
The Producer Price Index (PPI) – a measure of industrial prices – dropped to 3.4% in the June quarter.
Key contributors to rising prices in the June quarter were clothing and footwear (+2.6%), health (+1.5%) and housing (+1.2%). The increase in housing for this quarter was primarily due to an 8.1% lift in electricity costs. Higher electricity prices in Perth and Brisbane, following the end of the government rebate, drove the increase.
Annual goods inflation was 1.1% in the June quarter, primarily due to falls in automotive fuel prices, which are 10% lower than the same period last year.
Annual services inflation fell to 3.3% in June from 3.7% in March, the lowest since June 2022, reflecting broad easing in services such as rents and insurance.
The Consumer Price Index (CPI) measures changes in the price of a ‘basket’ of goods and services which account for a high proportion of expenditure by metropolitan households. Comprehensive CPI data is published by the Australian Bureau of Statistics quarterly, while a reduced price survey is conducted every month to supplement the quarterly data.
The Quarterly CPI measure is considered the more reliable indicator of inflation, as it measures all consumer prices. The monthly CPI measure is less accurate, but provides more timely insights on price changes that complement the quarterly release.
The Producer Price Index (PPI) measures changes in the price of industrial goods as they are produced. Some products – for example food – are measured in both the CPI and PPI indicators. PPI measures the price obtained by the producer, while CPI measures the price paid by the final consumer.
For more information from the ABS (including advice on using the CPI in contracts) see: https://www.abs.gov.au/statistics/detailed-methodology-information/information-papers/use-price-indexes-contracts
Ai Group Research & Economics Team
Website: Research and Economics Resource Centre
Email: economics@aigroup.com.au
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