Annual inflation fell to 6 per cent for the year to the end of June, down from 7 per cent. It followed strong employment figures last week which indicated the economy was still growing strongly.

Economist Chris Richardson said the result was “not perfect, but not bad, and clearly better than expected. Couldn’t rule out one more rate rise, but, either way official interest rates are now either at or very near their peak.”

The RBA will decide on another hike next week.

Brisbane inflation was running at 1 per cent in the June quarter, although insurance costs in the city jumped 17 per cent and 14 per cent nationally after a year of floods in Queensland and NSW.

Rental prices in Brisbane jumped almost 9 per cent annually and nationally 6.7 per cent. This is the largest annual rise since 2009, reflecting low vacancy rates amid a tight rental market across the country.

Services annual inflation recorded its largest annual rise since 2001, driven by higher prices in a range of services categories including rents, restaurant meals, holiday travel and insurance.

Goods annual inflation continued to ease from 7.6 per cent in the March quarter to 5.8 per cent in the June quarter after two years of strong price increases. Price rises for food, furniture, appliances and clothes slowed in the June quarter, while automotive fuel prices were 3.6 per cent lower compared to 12 months ago.

Among foods, dairy prices were up 15 per cent for the year.

The inflation data came as the ANZ said it had observed a big drop in spending and Deloitte Access Economics partner Stephen Smith said the figures showed the RBA had gone too far by lifting rates 12 times.

“The Australian economy is softening dramatically, the pace of inflation has peaked and is moderating quickly, wage growth is not excessive and medium-term inflation expectations are not rising,” Smith said.

“In that context, there should be no further rate rises in Australia.”

Aequitas Investment Partners chief investment officer David Berthon-Jones said: “Everyone can breathe a sigh of relief.”

He said the data pointed to a prolonged pause in interest rate hikes.

The ABS said the rate of growth in new dwelling prices continued to slow down after peaking in the September 2022 quarter at 20.7 per cent. The annual inflation has fallen for the past three quarters to 7.8 per cent in the June 2023 quarter.

“The recent moderation in price growth reflects lower new demand, improvements in the supply of materials and material costs easing,” the ABS said.

Minutes after the data release, the Australian stockmarket jumped 40 points.

Annual CPI inflation was 6.0 per cent in the June 2023 quarter, lower than the 7.0 per cent annual rise in the March 2023 quarter. This marks the second consecutive quarter of lower annual inflation, also known as ‘disinflation’, from the peak of 7.8 per cent in the December 2022 quarter.