Australia’s consumer inflation held steady in April, as rising health and travel costs offset falling petrol prices, reinforcing expectations for future interest rate cuts. The Australian Bureau of Statistics reported a 2.4% year-on-year increase in the consumer price index (CPI), matching March’s reading and slightly above the 2.3% forecast.
Core inflation also edged higher, with the trimmed mean rising to 2.8% from 2.7%, and a measure excluding volatile items and holiday travel also climbing to 2.8% from 2.6%. Despite the uptick, all metrics remained within the Reserve Bank of Australia's (RBA) 2–3% target range.
Markets showed a muted response, as the monthly CPI covers only a partial basket—primarily goods, not services. Goods prices increased just 0.9% year-on-year. The Australian dollar held steady at $0.6440, and three-year bond futures were flat at 96.60.
EY chief economist Cherelle Murphy noted that the data is not a full reflection of broader price pressures, adding that the RBA may continue easing policy amid diminished inflation risks and ongoing global uncertainty.
Interest rate futures show a 65% chance of a rate cut at the RBA’s July meeting, with expectations rising further for August after the release of Q2 CPI data.
Last week, the RBA cut rates to a two-year low, citing subdued inflation and global trade concerns. Meanwhile, Australia’s job market remains resilient with the unemployment rate at 4.1%, though modest wage growth limits inflationary pressure.
In April, health costs rose 4.4%, driven by insurance premium hikes, while holiday travel and accommodation surged 5.3%. Fuel prices dropped 12%, electricity fell 6.5% due to rebates, and rent growth slowed to 5.0%—its lowest rate since February 2023.