CPI falls to 4.9%, lower than expected

The news: Australia's monthly Consumer Price Index indicator has cooled more than expected, rising 4.9% in the 12 months to July. The Australian dollar dipped 0.34% shortly after the figures were released, before recovering to buy 64.6 US cents.

The numbers: July's annual increase was down from 5.4% in June, as price increases continue to ease from December's 8.4% peak. Housing (+7.3%) and food and non-alcoholic beverages (+5.6 per cent) were the biggest drivers of price growth in July, while fuel (-7.6%), fruit and vegetables (-5.4%) led price declines. Adjusted for volatile items, ABS said annual inflation was closer to 5.8% in July, compared to 6.1% the month before.

The context: The CPI result came in below market expectations of 5.2%. Monthly CPI figures tend to be more volatile than quarterly figures, with certain price data only available every three months. The Reserve Bank has left future potential interest rate rises on the table, as inflation is still significantly higher than the RBA's 2-3% target range.