Sydney: Australia’s Consumer Price Index (CPI) surged by 2.8% in July 2025, marking its highest level in a year, according to data released by the Australian Bureau of Statistics (ABS). This is a sharp rise from 1.9% in June, and well above economists’ forecast of around 2.3%.

Core Inflation Also Climbs

The core inflation rate (trimmed mean) also saw an increase, reaching 2.7%, up from 2.1% in the previous month. This indicates a broader rise in prices across multiple sectors.

Rising Rent, Food and Tobacco Costs Drive Inflation

The ABS reported that the main contributors to this spike were:

Rent and accommodation costs: up 3.6%

Food and non-alcoholic beverages: up 3%

Alcohol and tobacco: up 6.5%

Coffee, tea, and cocoa prices soared by 14.4%, largely due to supply disruptions caused by adverse weather conditions in major producing regions.

Future Outlook

According to estimates by the Reserve Bank of Australia, price increases are expected to continue through the rest of 2025, stabilizing around 3% for most of 2026.