Inflation cools in Australia to 4.2 per cent as oil prices stabilise

Inflation in Australia cooled to 4.2 percent in the 12 months to April 2026, from 4.6 percent the month before.

New data from the Australian Bureau of Statistics (ABS) shows that trimmed average inflation, the primary target used by the RBA, rose to 3.4 percent in the 12 months to April 2026, up from 3.3 percent in the 12 months to March 2026.

Today’s figures were largely in line with market expectations, which predict the central bank’s board will continue to raise interest rates at its next meeting in June.

Six days ago, Australia’s unemployment rate rose to 4.5 percent, further underscoring the circumstances that the RBA will maintain interest rates when it meets on June 16.

Steven Dooley, head of market insights at Convera, says that while inflation has fallen, it is unlikely to cool at the pace desired by the government or the RBA.

“Today’s figures, with annual inflation down from 4.6 percent to 4.2 percent, but truncated average inflation rising from 3.3 percent to 3.4 percent, reinforce the view that inflation in Australia is not cooling at the pace policymakers or households would like,” Dooley said.

“Housing and transport costs are still doing most of the heavy lifting, rising 6.3 percent and 6.6 percent respectively over the year, while domestic price pressures remain persistent.

‘It matters because much of this inflation is driven by parts of the economy, such as rents and wages, that are slow to respond to interest rate rises. In other words, most of the inflation problem is now in the categories where the Reserve Bank’s tools work least effectively.”