Interest rates likely to stay on hold

Homebuyers and the Labor government can breathe a sigh of relief that today inflation numbers are likely to mean the Reserve Bank will hold fire on interest rates next week.

The consumer price index (CPI) rose 0.6 per cent in the June quarter, lifting the annual rate to 3.1 per cent and above the Reserve Bank's two to three per cent target band.

Economists had forecast a 1.0 per cent rise in the quarter, for an annual pace of 3.4 per cent.

The central bank had already predicted that the CPI would rise above the inflation band when it left the cash rate unchanged at its July board meeting.

Underlying measures of inflation - more critical to the interest rate outlook - averaged 2.7 per cent in the 12 months to June, down from 3.05 per cent in the year to March.

This was the lowest average annual rate since the June quarter of 2007.

Both measures of underlying inflation - the trimmed mean CPI and the weighted median CPI - rose 0.5 per cent in the June quarter, when economists forecasts had centred on a 0.8 per cent increase.