Electricity discounts unwind in July (perhaps temporarily)

Electricity 'shocker'

The July monthly inflation gauge was always going to bounce higher due the unwinding of electricity price discounts, and due to base effects. 

As it turned out, headline inflation bounced by more than expected, back up to 2.8 per cent over the year to July. 

And the reason was...yes, it was electricity costs surging by more than 13 per cent over the year, compared to a drop of -6 per cent over the year to June. 

Source: ABS

A lot of this impact will reverse next month, however, since rebate payments will kick in from August instead of July for New South Wales and the ACT. 

Even still, it seems most likely that interest rates will be held until Melbourne Cup day, which is likely to be the next 'live' meeting in the first week of November. 

SEEK reported that wages growth in its advertised salaries index was soft again at only 0.2 per cent in the month of July.

It's the first time that wages growth has seen consecutive monthly results of under 0.3 per cent since 2021, and a clear sign that wages growth is moderating further.

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