Australia's consumer price index (CPI) rose 3.5% in the 12 months to July, down from 3.8% in the 12 months to June, while trimmed mean inflation held steady at 3.6%, according to a Wednesday report by the Australian Bureau of Statistics (ABS).

The largest contributors to annual inflation were housing at 5%, food and non-alcoholic beverages at 3.2%, and recreation and culture at 2.6%, the report said.

Rachael McCririck, ABS head of price statistics, said housing rose due to increasing costs for new dwellings, with new dwellings prices up 5.7% as builders passed on higher costs for materials and labor.

Annual food inflation was 3.2%, driven by higher prices for meals out and takeaway, which rose 4.5% in the 12 months to July, per the report. Annual transport inflation rose to 1.6% from 0.1% in the 12 months to June, the report added.

McCririck said automotive fuel prices rose 7.5% in July after falling for three consecutive months, driven by higher world oil prices and the partial unwinding of the federal government's fuel excise relief measures in July.