Australia's consumer price index (CPI) is expected to rise 0.8% month over month in July, taking the annual pace of inflation down to 3.3% from 3.8% in May, Westpac said in a Tuesday report.

The bank estimates that the third-quarter CPI will rise by 1.1% from the previous quarter, bringing the annual pace to 3.7% from 3.9% in the second quarter and representing a 0.2 percentage point downward revision to its previous estimate of 1.3%.

Westpac's latest fourth-quarter estimate of 0.8% is revised from 1% previously, with the bank now forecasting a year-end CPI of 3.9%, down from a previous estimate of 4.3%. This compares with the Reserve Bank of Australia's latest estimate of 3.6%.

The July trimmed mean CPI reading is forecast to rise 0.4%, on par with the average for the previous three months, taking the annual pace down a touch to 3.5%, Westpac said.

It added that holiday travel and auto fuel are the key drivers of the stronger monthly outcome, reflecting higher holiday travel costs and the partial unwinding of temporary fuel excise cuts.