The latest inflation read reported this week remained steady at 2.4%, sitting slightly above the 2.3% the market was expecting. This marks the third consecutive month that inflation has remained within the RBA’s 2–3% target range, suggesting a period of relative price stability.
On the other hand, trimmed or core inflation, a key measure watched closely by the RBA, rose to 2.8%. Ongoing price pressures seen in sectors including housing, food and beverage and recreation. Unforeseen circumstances can cause added pricing pressures. Recently the prices of eggs increased by 18.6% over the year, driven by the supply disruptions caused by the most recent bird flu outbreak. This volatility underscores the uneven nature of inflation across different categories.
Electricity prices helped offset the broader inflationary pressures, dropping 6.5% over the year. This reduction was a result of energy rebates in states like QLD and WA being phased out. The rebates played a significant role in not only providing some relief to households but also assisted in balancing out the rising costs. Without all the government rebates, electricity prices would have risen by 1.5% in the 12 months to April.
The RBA latest reduction demonstrated that they were comfortable with the current inflation outlook and have hinted that further rate cuts will come if prices remain under control. However, the RBA remains cautious in their approach, hinting that they are focusing on the more reliable quarterly data to confirm their views. Their focus is now shifting to global risks and ongoing trade tensions, which may also impact pricing pressures domestically. The RBA’s next meeting will be on the 7th of July and will need to rely on monthly CPI data to make their monetary policy decision.
Source: Australian Bureau of Statistics, Monthly Consumer Price Index Indicator, April 2025. Reserve Bank of Australia, Statement by the Monetary Policy Board: Monetary Policy Decision, 20 May 2025
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