Australia’s April CPI slowed to 4.2% annually, undershooting forecasts, as a fuel excise cut weighed on headline, but the trimmed mean core measure edged up to 3.4%, its highest since late 2024.

Summary:
Source: Australian Bureau of Statistics, April 2026 monthly CPI indicator

• Headline CPI rose 0.4% in April, slowing the annual pace to 4.2% from 4.6%, undershooting median forecasts of 0.6% monthly and 4.4% annually
• The downside surprise was driven primarily by the government’s temporary fuel excise reduction, which cut automotive fuel prices and weighed on the transport component
• The trimmed mean measure of core inflation rose 0.3% in the month, in line with forecasts, lifting the annual pace to 3.4% from 3.3%, the highest reading since late 2024
• The weighted median CPI rose 0.2% monthly and 3.5% annually, with both core measures running above the top of the RBA’s 2-3% target band
• The data are described as broadly within the RBA’s own forecast expectations, keeping a June pause on the table, though the direction of core inflation remains a concern
• The fuel excise reduction unwinds in July, at which point headline CPI will face direct upward pressure, adding complexity to the RBA’s second-half outlook

The headline

Australian consumer prices rose by less than expected in April, with the annual pace slowing to 4.2% from 4.6% in March, data from the Australian Bureau of Statistics showed on Wednesday. The monthly increase of 0.4% came in well below the median forecast of 0.6%, and the annual rate undershot the 4.4% consensus. The downside surprise, however, owed almost entirely to the government’s temporary halving of the fuel excise, which pushed transport costs lower and provided a one-off drag on the headline that will reverse when the measure unwinds in July.

The core

Stripped of volatile items, the picture was less reassuring. The trimmed mean measure of core inflation, the RBA’s preferred gauge of underlying price pressure, rose 0.3% in the month, in line with forecasts, but the annual pace ticked up to 3.4% from 3.3%, its highest reading since late 2024. The weighted median CPI rose 0.2% monthly, with the annual rate at 3.5%. Both core measures remain above the top of the RBA’s 2-3% target band, and the direction of travel in the trimmed mean, however incremental, is not the one the central bank wants to see.

The RBA context

The April data land against a backdrop of three consecutive RBA rate increases this year, a tightening cycle that has yet to produce a visible turn in underlying inflation. The central bank’s own forecasts had anticipated an outcome broadly in line with what the ABS delivered, and that alignment matters: if the April print sits within the RBA’s internal projections, the argument for a pause at the June meeting remains defensible. Several analysts noted after the release that the data do not obviously force the RBA’s hand in either direction, leaving the June decision genuinely open.

The July complication

The temporary nature of the fuel excise relief adds a layer of complexity to the outlook that the RBA will need to factor into its June communication. The excise cut, in place for three months from April, unwinds in July, at which point headline CPI will face direct upward pressure from the reversal alone. That mechanical effect risks clouding the signal from underlying inflation at precisely the moment when the RBA will be trying to assess whether its tightening cycle has done enough. Core inflation will need to be showing clearer signs of moderation by then to make a sustained pause credible.

The bottom line

April’s CPI report offered the RBA a modest degree of comfort on the headline without resolving the underlying question. Fuel tax relief produced a softer top-line number; trimmed mean inflation moved in the wrong direction. The data are consistent with a June pause but do not guarantee one, and the July reversal of the excise cut will ensure that the inflation debate remains live well into the second half of 2026.

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