According to Jinshi, Moody's Analytics economist Cruz said that the decline in Australia's overall inflation rate did not increase the possibility of the Reserve Bank of Australia cutting interest rates before February, but it did reduce the risk of the Reserve Bank of Australia cutting interest rates after February.

He said in a report that August data showed momentum was moving in the right direction, but that underlying inflation still had some way to go before it could sustainably return to the RBA's target level.

Mr Cruz added that the risk of a spending spree from cost-of-living relief measures was easing, with household deposits rising more than 2 per cent in July from June as households put cost-of-living support into the bank. Meanwhile, survey data continued to show Australian households were reluctant to spend on big-ticket items.