We've only had a week of the election campaign so far, but we are well on the way towards a rate rise from the Reserve Bank next Tuesday.

We are not there yet: the consumer inflation figures on Wednesday will be the big test, but the flow of data from here and offshore has turned positive.

The fragile European banking system was strengthened by the mostly positive results of the bank stress tests released on Friday.

That should convince the RBA that the financial system is not threatened by Europe's weakened banks and sovereign debt problems.

On the basis of the test results, you'd expect the RBA to give the European banking system a qualified pass, which in turn increases the prospects of a rate rise.

Good growth figures in Britain and a sharp rise in business confidence in Germany and Italy on Friday also add to the impression that Europe's economy, for the time being, is not being crunched.

So the Reserve Bank's check list of issues to confront in the lead up to the board meeting tomorrow week, has been reduced by at least one item: Europe is healthier than it seemed at the start of July.

Here in Australia, a record rise in export prices in the June quarter got the markets chattering about 'rate rise looms' over the weekend and ahead of the release of the consumer price index for the same three months on Wednesday.

The 16.1% jump in export prices for the June quarter was the largest since the series began in 1974 and confirms the Reserve Bank's optimism (and that of the federal government in the 2010-11 budget) that our terms of trade will hit a record in calendar 2010.

Overall, export prices rose by around 7% in 2009-10, while import prices fell just over 5%, as a result our terms of trade strengthened considerably in the year to June.

The rise in the export index came from Asian buyers (especially China) of our iron ore, gas and coal exports.

While world iron ore prices have since retreated to levels seen late last year, that fall won't appear in the export price index until the 4th quarter of this year.

The sharp rise in export income could boost national income by 4% or more, according to RBA estimates.

Later today we get the Producer Price Index also for the June quarter. While it's not a reliable guide for the CPI, some elements are similar, such as government charges and fees, such as power, gas, water and sewerage charges which continue to rise.

Then we have the June quarter inflation figures due for release on Wednesday.

The AMP's chief economist, Dr Shane Oliver says he expects headline inflation to have risen 0.9% or 3.3% year on year.

"But because this will be boosted by an increase in tobacco excise it will be necessary to focus on the underlying rate of inflation which we expect to rise 0.7% in the quarter or 2.9% over the year.

"If this is the case it would be broadly in line with RBA expectations and shouldn't be enough to justify an imminent rate hike, but of course if underlying inflation is 3% or above then the pressure to raise interest rates again next month will intensify.

"The CPI report will make or break the case for an August hike," according to Macquarie interest rate strategist Rory Robertson.

Most analysts assume a result of 0.7% or less would likely see the cash rate stay at 4.5% for at least another month, while a rise of 0.9% will increase pressure on the RBA for a rate rise in an election campaign.

Mr Robertson says he sees underlying inflation rising by 0.7% to 0.8%.

But he said that if "it's 0.9% or more then rates are going to 4.75% on August 3".

Friday's export price data showed prices for metal ore exports climbed 43% in the second quarter alone, while coal rose 24%, gold 11% and gas 10%.

In contrast the overall price of imports rose a modest 1.9% in the quarter and were down 5.2% for the year, thanks mostly to the overall strength of the Aussie dollar during the year.

That fall in import prices is helping keep a lid on inflation.