Inflation DROPS in Australia – but is still way too high and here’s how it’s going to affect your mortgage

Inflation has fallen but still remains well above the Reserve Bank target – meaning more interest rate rises are likely. 

The consumer price index rose by six per cent in the year to June, down from seven per cent in the year to March, the Australian Bureau of Statistics revealed on Wednesday.

The quarterly measure, which is more comprehensive, showed price pressures remained elevated, with inflation still well above the Reserve Bank’s two to three per cent target. 

The supermarket checkout is still a stressful place to be with dairy product price soaring by 15.2 per cent annually, and bread and cereal costs rising by 11.6 per cent. 

Inflation has fallen but still remains well above the Reserve Bank target – meaning more interest rate rises are likely (pictured is a Woolworths shopper in Sydney’s east)

Housing costs, including rent, are continuing to surge, growing by 8.1 per cent during the last financial year.

The monthly measure showed inflation in June growing at an annual pace of 5.4 per cent, down from a downwardly revised 5.5 per cent in May. 

The high measures of inflation have stirred fears the Reserve Bank of Australia will increase interest rates again in August by another 0.25 percentage points, taking the cash rate to 4.35 per cent. 

The high measures of inflation have stirred fears the Reserve Bank of Australia will increase interest rates again in August by another 0.25 percentage points, taking the cash rate to 4.35 per cent (pictured is incoming governor Michele Bullock, left, with outgoing RBA chief Philip Lowe)