Today’s release provides clear evidence that inflationary pressures are beginning to moderate. The consumer price index fell to a 12-month low of 4.9 per cent in July, down sharply from 5.4 per cent in June.

“Business and consumers can feel a sense of relief, with inflation continuing to fall in July,” ACCI chief executive officer Andrew McKellar said.

Much of the fall can be attributed to volatile items such as petrol, fruit and vegetables, and holiday travel and accommodation.

“The Reserve Bank’s interest rate rises have had a clear impact on economic activity and inflation. Consumers have responded by cutting back spending on discretionary items such as holiday travel, furniture and household goods, and recreational activities,” Mr McKellar said.

“The easing in prices of essential items such as fruit and vegetables will also alleviate some pressures on households.”

Further increases in non-discretionary items such as rent and electricity – which are ongoing despite the government’s energy bill relief kicking in in July – remain a serious concern for consumers and business.

“While inflation is clearly on a downward trajectory, the Reserve Bank will be reluctant to take the pressure off the wound. Businesses urge that the RBA stays its hand from any further interest rate hikes,” Mr McKellar said.