Australia’s Economy: CPI Insights & RBA Policy Outlook

AU: ICC

Date: Wednesday, 24 June at 11.30 am AEST

In April, Australia’s consumer price index continued to ease, with headline inflation falling to 4.2% year‑over‑year in the 12 months to April 2026, down from 4.6% in March. Housing remained the largest contributor, rising 6.3%, while transport prices eased sharply to 6.6% after automotive fuel costs fell 7.0% in the month—a partial reflection of the halving of the fuel excise. The Reserve Bank of Australia’s preferred inflation metric, the trimmed mean, edged up slightly to 3.4% from 3.3%.

During its Board meeting earlier this week, the RBA acknowledged that “inflation is still too high” and noted that ongoing disruptions to global oil supply continue to feed into broader price pressures, with some firms passing higher costs on to consumers. The Board deemed it appropriate to keep the cash rate at 4.35% while evaluating the impact of the three rate hikes delivered this year and the evolving energy shock.

Nevertheless, the RBA made clear that its hawkish stance remains unchanged. The Board reaffirmed its focus on delivering price stability and full employment, stating that it “will do what it considers necessary to achieve that outcome, including increasing the cash rate target further if required.”

The upcoming May CPI release will therefore be closely watched. Consensus forecasts that headline inflation will resume its 4.6% rise YoY, with the trimmed mean expected to move toward 3.6%. A stronger‑than‑expected core inflation reading would reinforce the RBA’s hawkish bias and keep the door open for further tightening, while a softer print would support the view that policy is now sufficiently restrictive.

Interest‑rate markets this week have priced in eight basis‑point hikes for the RBA’s August meeting, with a cumulative 15 basis‑point increase projected for the remainder of 2026.

AU all groups CPI and trimmed mean chart

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