Power rebates mask the threat of inflation, with no rate cuts expected soon.

Economists and business leaders argue that state and federal governments have not provided sufficient support to help the Reserve Bank curb inflation, cautioning that households will only experience real cost of living relief when interest rates are reduced.

Headline inflation dropped to 3.5 percent in July, driven by temporary reductions in electricity bills due to government energy rebates. However, analysts warn that these figures are unlikely to prompt the RBA to accelerate interest rate cuts, as underlying price pressures remain strong.