Life got significantly more expensive over the last three months, with the consumer price index rising by 0.7 per cent in the June quarter.

This is a major increase on the March quarter price rise of 0.2 per cent, the Australian Bureau of Statistics reported.

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However, it is not as big as the 0.8 per cent predicted by economists, meaning the Reserve Bank still has more room to cut the cash rate again this year.

The big driver was a 12.2 per cent increase in the cost of automotive fuel. Medical and hospital services also increased significantly, by 4.5 per cent, while new dwelling purchases by owner-occupiers also increased by 1.5 per cent.

The cost of food and non-alcoholic beverages increased by 1.3 per cent, while education increased 5.4 per cent.

In better news, the cost of transport fell by 2.4 per cent, as did the cost of clothing and footwear (by 0.9 per cent). Domestic holiday travel and accommodation also fell by 5.4 per cent.

Inflation for the year to June now stands at 1.5 per cent, still well below the Reserve Bank’s target of between 2 and 3 per cent.

So what does all this mean for the struggling Australian economy?

Industry Super Australia chief economist Stephen Anthony said, when you take out the significant rise in the cost of fuel, it was a “soft outcome”.

“It’s evidence of an economy operating below capacity. This would support the that the RBA has room to cut rates further.”

However, he said the chances of a rate cut over the next couple of months are less than 30 per cent.

The RBA, he said, would be paying close attention to any data relating to retail sales and consumer sentiment. If these indicators are soft, a rate cut is more likely.

The June quarter national account figures will also be key, as will a potential rate hike by the United States Federal Reserve. “In a relative sense, the Fed may do some of the work for the RBA,” Mr Anthony said.