Inflation Rate Eases to 2.1 Percent, Fuelling Rate Cut Hopes

The biggest contributor to annual inflation was food and non-alcoholic beverages, which rose 2.9 percent—lower than the 3.1 percent in April.

Australian Treasurer Jim Chalmers is seen during a Federal Cabinet meeting in Perth, Australia, on June 3, 2025. AAP Image/Richard Wainwright

Australia’s inflation rate has cooled to its lowest level in more than 18 months, strengthening expectations the Reserve Bank could begin cutting interest rates as early as next month.

If the RBA moves in July, it would mark the first cash rate cut since February.