Australia’s headline inflation unexpectedly softened in April, reinforcing the view that the Reserve Bank of Australia may remain cautious about delivering further rate hikes despite still-elevated core price pressures. Headline CPI slowed from 4.6% yoy to 4.2% yoy, below expectations of 4.4% yoy. On a monthly basis, CPI rose 0.4% mom, undershooting forecasts of 0.6% mom.
The moderation was driven largely by easing goods inflation, particularly fuel prices. Annual goods inflation slowed sharply from 5.5% yoy to 4.7% yoy, with automotive fuel inflation easing from 24.2% yoy to 18.6% yoy. Services inflation also edged lower from 3.6% yoy to 3.5% yoy, though housing and essential services continued exerting upward pressure. Housing inflation remained elevated at 6.3% yoy, while transport costs rose 6.6% yoy and food and non-alcoholic beverages increased 2.8% yoy.
Underlying inflation, however, stayed relatively sticky. Trimmed mean CPI edged up from 3.3% yoy to 3.4% yoy, matching expectations and marking the highest reading since mid-2024. Monthly trimmed mean CPI rose 0.3% mom, slightly below expectations of 0.4% mom.
The mixed report is likely to support the RBA’s current wait-and-see stance, with softer headline inflation easing immediate tightening pressure after the three rate hikes this year, while resilient core inflation continues preventing policymakers from declaring victory over price stability.
| Indicator | Previous | Latest | Expectation |
|---|---|---|---|
| Headline CPI YoY | 4.6% | 4.2% | 4.4% |
| Headline CPI MoM | 1.1% | 0.4% | 0.6% |
| Trimmed Mean CPI YoY | 3.3% | 3.4% | 3.4% |
| Trimmed Mean CPI MoM | 0.2% | 0.3% | 0.4% |
| Goods Inflation YoY | 5.5% | 4.7% | — |
| Automotive Fuel Inflation YoY | 24.2% | 18.6% | — |
| Services Inflation YoY | 3.6% | 3.5% | — |
