Rate cut hopes rise on latest inflation print
In welcome news for mortgage holders, Australia’s inflation rate came in lower than expected, adding to the chances of another rate cut.
Australian mortgage holders have received a major boost, with the latest inflation data coming in significantly lower than market expectations.
The latest consumer price index rose by 2.1 per cent for the 12 months to May 2025, beating expectations of 2.3 per cent.
The all-important trimmed mean inflation rate, which the Reserve Bank considers when making decisions about the cash rate, came in at 2.4 per cent, its lowest point since November 2021.
The money markets immediately jumped and are now factoring in an 85 per cent chance of a rate cut in July.
Australia’s inflation undershoot came as the price of food and non-alcoholic beverages fell from 3.1 to 2.9 per cent over the month.
Prices for fruit and vegetables rose 2.8 per cent in the 12 months to May, down significantly from a 6.1 per cent rise in the 12 months to April.
Fruit prices fell 2.7 per cent in the month of May with lower prices for mandarins, oranges, avocados and apples.
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