The latest inflation data from the Bureau of Statistics quickly put an end to any thoughts of another interest rate rise. The consumer price index growth of 2.1% at first glance suggested that inflation was finally back within the Reserve Bank’s 2%-3% target range. But further analysis shows that inflation growth remains very much absent from the economy, except for items households cannot avoid.

It says something about the lack of inflation growth that we have reached a point where growth of 2.1% could be in any way considered strong enough for the RBA to think about increasing rates. The RBA’s target range is 2% to 3%, meaning that it really only needs to think about increasing interest rates if the growth looks to be heading above 3%. Right now the economy is flat out getting above 2%.

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And while the latest CPI figures show inflation at 2.1% the RBA’s core inflation measure of the trimmed mean actually fell very slightly and at 1.9% is under the 2% mark for the 10th straight quarter:

Even if we look at a quarterly growth basis, there is no sign of an impending inflation boom. Both the CPI and the trimmed mean recorded slower growth in the June quarter than in the preceding March quarter:

And the lack of inflation is even more apparent when you consider that one of the biggest drivers of CPI growth was alcohol and tobacco prices. The thing about those items – especially tobacco – is that their prices are not driven by demand. There is no great influx of people taking up smoking. The driver of tobacco prices are increases in excise – meaning that its influence on inflation growth gives a somewhat skewed view of the level of demand in the economy.

If we exclude alcohol and tobacco then the CPI grew by just 1.7% on the past year:

The other big driver of inflation recently has been petrol prices. Across the nation they rose 16.3% over the past year – the fastest annual growth for a decade:

That price is driven by international factors and says little about the level of demand in our economy.

So forget thoughts of the RBA hitting the interest rate lever. There is nothing in these figures that would have the RBA thinking that inflation is about to return to previously normal levels, let alone growing too fast.

For core inflation to get back to the RBA midpoint of 2.5% within the next six months inflation would have to grow in that time at a pace not seen for five years.

But that does not mean everyone is experiencing low increases in their cost of living, or that even with low wages growth things aren’t too bad because inflation is low.

The problem is that the picture of inflation is quite varied across the nation and also across the range of things that we buy.

In Melbourne for example CPI did grow in the past year by 2.5%, but in Perth it rose just 1.1%:

Across the capital cities, inflation in Melbourne, Adelaide, Hobart and Canberra was above the national average of 2.1%:

And a clear driver of inflation in those cities is housing costs – rents and utility costs as well as property rates and charges.

Here we come to the problem of the low level of inflation not matching up with the reality of people’s lives.

Across the nation the biggest contributors to inflation growth over the past nine months have been petrol, health, tobacco and education costs. Aside from tobacco, those are pretty hard categories to avoid spending money on. The items that have most driven down inflation in that period have been AV equipment and international holidays – not exactly essentials.

If we look at the average annual growth of essential spending groups such as food and beverages, housing, education, health, and insurance compared with recreation and culture (which includes AV equipments, holidays travel, books, and sporting activities), we see aside from food and beverages, the essential groups have vastly outpaced inflation:

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And while even housing costs have in general moderated over the past few years compared to what they were growing at when inflation was last soaring prior to the GFC, they remain well above wages growth and vastly outpacing the price rises of recreation and culture items:

It means that while general inflation remains relatively poor, households are not seeing many gains because aside from food, the lowest rises are coming in areas that are often forgone when essential bills need to paid.

And it is why, regardless of the level of inflation, until we see wages growth start to rise closer to 3%, there is little sign either of the economy of households able to handle an interest rate rise.

• Greg Jericho is a Guardian Australian columnist