Reserve Bank of Australia RBA
(Image: AAP/Dan Himbrechts)

As expected, Australia's annual inflation rate for 2020-21 has jumped, off the back of rising fuel and health costs, but the Reserve Bank's preferred measures remain stubbornly below its target rate of 2% to 3%.

The Consumer Price Index rose 0.8% in the June quarter and 3.8% over 2020-21, with the removal of the 2020 June quarter deflationary figure contributing to the spike in the annual number. There'll be a similar reverse effect next quarter when the large "rebound" CPI figure from the 2020 September quarter is removed.

Economists had expected the annual rate to come out anywhere between 3% to 3.9% (it was AMP's Shane Oliver who got closest with 1.9%). It's the highest annual rate in years -- though the Australian Bureau of Statistics suggested in be seen in context, and noted that inflation over five quarters from March 2020 was still only 1.9%.