Inflation stability shows RBA’s three rate hikes are doing the job as August hike likelihood cools

Underlying inflation held steady in June in a surprise finding that should see households feeling confident that another rate hike won’t be needed next month, though question marks remain for the longer-term.Data released by the Australian Bureau of Statistics (ABS) on Wednesday shows the Consumer Price Index (CPI) rose 3.8% for the 12 months to June, down from 4% in May.The data is cooler than markets and economists had been expecting, with lenders having warned households were most likely in line for a brutal fourth rate hike for the year.While inflation is significantly higher than the RBA wants, two months of steady underlying inflation should give the bank some breathing room.At 3.6% for the 12 months to June, the measure of underlying inflation, the trimmed mean, is unchanged from May.This comes despite market forecasts upwards of 3.8%.Source: ABSMonthTrimmed mean (%)June3.6May3.6April3.4March3.3February3.3January3.3The trimmed mean strips out the most volatile prices changes each month – unusual fuel or food prices as an example – instead providing a more comprehensive reading of inflation. “When we look through some of the bigger price movements, underlying inflation is ste...