The Reserve Bank is expected to press ahead with another interest rate cut by year's end, with inflation remaining subdued despite a spike in petrol prices and signs the drought is now hitting the hip pockets of consumers.

Markets remain convinced the RBA will be forced into cutting official interest rates to a new low of 0.75 per cent by December, after the Australian Bureau of Statistics reported inflation rose by 0.6 per cent in the June quarter.

Petrol prices have climbed back to 2018 levels, accounting for half the lift in inflation through the June quarter. Credit:Louise Kennerley

Half of the increase was due to a sharp lift in petrol prices, confined to April and May, that added more than 10 per cent to bowser costs across the country. The increase more than offset a drop in petrol prices through the first three months.

In positive news for the Morrison government, electricity prices dropped by 1.7 per cent while gas and other household fuel costs slipped by 0.5 per cent.