Cost-of-living news every Aussie has been waiting for as Reserve Bank makes huge call on inflation: What you need to know

A senior Reserve Bank official has given a strong hint interest rates will be cut next month.

Andrew Hauser, the RBA’s deputy governor, said the underlying inflation rate of 2.7 per cent for the June quarter was a number closer to the mid-point of the Reserve Bank’s two to three per cent target.

‘The data yesterday were very welcome, I could stop there,’ he said.

‘We were looking for more evidence that inflation was moving sustainably back to the mid-point and we’ve had another piece of that jigsaw yesterday.’

The Reserve Bank on July 8 surprised financial markets by leaving the cash rate on hold at 3.85 per cent.

At the time, Governor Michele Bullock said the March quarter’s underlying inflation rate of 2.9 per cent was still too high, despite being within the RBA band.

But new Australian Bureau of Statistics inflation data, released on Wednesday, showed underlying inflation falling to the lowest level since December 2021, during the aftermath of Covid lockdowns in Sydney and Melbourne.

This trimmed mean measure is the RBA’s preferred inflation yardstick because it removes volatile price movements like electricity rebates and petrol prices.

Headline or consumer price index inflation fell again to just 2.1 per cent, the lowest since March 2021.

Both numbers have firmed up the prospect of a rate cut on August 12, that would see the cash rate fall back to 3.6 per cent for the first time since May 2023.