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Australian inflation grew an unusually large 0.6% during June, driven by big rises in automotive fuel, holiday travel and accommodation prices, the Melbourne Institute survey release this morning showed.

That rise followed May’s fall of 0.2% and saw the year-on-year rate of inflation across the economy increase to 1.5% from 1% previously.

Dr Sam Tsiaplias, senior research fellow at the Melbourne Institute, said that “Given this rise, it seems unlikely that we will get a repeat of last quarter’s negative CPI result for the current quarter.”

That will have implications for expectations about the release of second quarter CPI by the ABS on July 27. That release is an important factor in the the almost universal expectation that the RBA will be lowering rates at its August meeting.

But fuel prices are volatile and the Melbourne Institute’s trimmed mean measure of the Inflation rose by a less alarming 0.2% in June, after falling by 0.2% in May.

Tsiaplias said “it is often preferable to look at smoothed measures of inflation such as the trimmed mean. Both trimmed mean inflation and the inflation gauge excluding volatile items rose this month, although they are still below their long-term averages”.

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