Consumer prices rose 0.8 per cent over the three months to June, making a 6 per cent increase over the past year.

The result is slightly lower than most economists were expecting and reduces the chances of a Reserve Bank interest rate rise next Tuesday.

The Reserve Bank’s preferred measure of underlying inflation, which excludes the most volatile price changes, came in at 0.9 per cent for the quarter and 5.9 per cent over the 12 months to June.

The RBA targets an inflation rate of 2-3 per cent, with quarterly inflation now running at an annualised pace of 3.6 per cent on its preferred trimmed mean measure.

Falling prices for domestic travel and accommodation (-7.2 per cent), electricity (-1.8 per cent), clothing accessories (-2.2 per cent) and automotive fuel (-0.7 per cent) helped lower inflation over the quarter.

However, those price cuts were offset by rising rents (+2.5 per cent), international holiday travel and accommodation (+6.2 per cent), other financial services (+2.5 per cent), new dwellings purchased by owner-occupiers (+1.0 per cent) and food (+1.6 per cent).

The surge in asking rents seen over the past year or so has finally fed through to a jump in the official Australian Bureau of Statistics measure as more leases have rolled over.

“Rents recorded the strongest quarterly rise since 1988, reflecting low vacancy rates amid a tight rental market,” noted Michelle Marquardt, the ABS head of price statistics.

“Rental price growth for flats continued to outpace the growth for houses.”

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