Inflation prompts rate fears; Domain: house prices set to fall; record heatwave hits Europe
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What is the main topic discussed in this episode?
Welcome to Fear and Greed, business news you can use today.
What recent inflation trends could lead to interest rate hikes?
A jump in inflation opens the door to another interest rate hike. Domain forecasts a drop in house prices in Sydney, Melbourne and Canberra and a slowdown in growth elsewhere. And more than 1,200 cargo ships carrying goods worth an estimated $125 billion or $180 billion Aussie. remain stranded in the Strait of Hormuz. Plus, a third case of bird flu detected, this time in South Australia, and one of the worst heatwaves on record hits Europe. It is Thursday, the 25th of June, 2026. I'm Michael Thompson, and good morning, Sean Aylmer. Good morning, Michael.
That's broadly bad news overall, right? Well, yeah. Look, I mean, it's not the most uplifting Thursday morning news show. I think that's true.
What does Domain forecast for house prices in major Australian cities?
Well, I have to do something about that throughout the course of the episode, Sean. Let's get into it. The main story this morning, underlying inflation rose... more than expected in May, and that increases the chances of another interest rate hike later in the year. The headline rate was lower than expected, but the trimmed mean rate, which is the one that the Reserve Bank actually looks at and excludes the most volatile items, Now, that wasn't so impressive.
How is the closure of the Strait of Hormuz affecting global trade?
On that basis, inflation was up 0.4% for the month. That was above expectations. And the fourth consecutive month of higher growth for the full year, headline inflation is running at 4%. Underlying is at 3.6%. This is all according to the Australian Bureau of Statistics, Sean.
Yeah.
What it showed us yesterday, you can start seeing the second round impact of higher fuel prices feeding through the economy. So the prices of fruit, dining and takeouts, milk, all products that heavily rely on transport,
What are the implications of the recent bird flu case in Australia?
they were quite a bit higher same deal where in housing when new dwelling costs jumped nearly one percent that's a big rise it just looks like tradies are adding a fuel surcharge passing on higher material costs so we've talked about the impact on petrol prices ever since the oil spike what we've always been worried about and we're seeing now is that it filters through to the rest of the economy So the stronger headline inflation that we've seen in recent times is leaking into underlying inflation. This whole second round effect is starting to hit the economy.
Yeah, and it's not a great number for people looking for interest rate pauses, is it? Because the trimmed mean measure of inflation has now trended up since the middle of last year. And as we say time and time again, Sean, on this show, the trend is definitely, Michael, your friend. There we go. It's seamless, right? I mean, we haven't got the t-shirts yet. Once we have the t-shirt, I'll just point to the t-shirt when you have to say your line and that. More than half of all the items in the basket of goods measured by the ABS are showing price rises above 3% over the year.
What impact is the heatwave having across Europe?
And even the good news, a big drop in transportation costs, well, that can be explained away by the cutting of the fuel excise.
You are miserable this morning, Michael.
You've really, you have done this to me. I've always been an optimist and you have brought me down.
The economy has done it to you, Michael. Treasurer Jim Chalmers said he wasn't complacent about the trajectory of inflation, but he'd rather see the headline figure coming down than going up. This is only one month figures, so caution is needed about putting too much weight on it. But Michael, as you said, the trend is your friend and given underlying inflation just keeps rising, It's well outside the Reserve Bank's 2% to 3% target. The trend really isn't our friend at the moment, particularly if you want lower rates. If the Reserve Bank wants to lift interest rates, then these figures basically provide a good argument for doing so.
How are rising energy prices influencing the economy?
Bond markets have priced in a 64% chance of a rate hike this year. The central bank is now between a rock and a hard place, really. I'd love to know where that phrase comes from because it doesn't really make any sense to me, but I like it. A rock and a hard place.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:06–0:09
2
What recent inflation trends could lead to interest rate hikes?
0:09–0:58
3
What does Domain forecast for house prices in major Australian cities?
0:58–1:24
4
How is the closure of the Strait of Hormuz affecting global trade?
1:24–2:01
5
What are the implications of the recent bird flu case in Australia?
2:01–3:13
6
What impact is the heatwave having across Europe?
3:13–4:02
7
How are rising energy prices influencing the economy?
4:02–5:33
8
What changes are coming to negative gearing and capital gains tax?
5:33–17:17
Speakers
2 identifiedMore from FEAR & GREED | Business News
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