NAB forecasts Australian April headline CPI easing to 4.4% on fuel excise relief, but warns of broadening cost pass-through with trimmed mean seen at 3.4%, risk skewed higher.

Summary:

• NAB forecasts headline CPI falling to 4.4% in April from 4.6%, driven by a roughly 7% monthly decline in automotive fuel prices following the government’s 32 cents per litre excise reduction
• Trimmed mean inflation forecast at 0.35% monthly and 3.4% annually, with NAB flagging the risk is skewed toward a 3.5% print
• April will show the first measurable pass-through of cost pressures from the Middle East conflict, with NAB survey data showing input cost surges spreading from transport and logistics in March into a broader range of industries in April
• Purchase cost growth running at 4.5% is outpacing output price growth, with much of the shock currently absorbed as margin compression rather than passed to consumers, though NAB expects some acceleration in goods and grocery prices to emerge
• NAB pencils in Q2 quarterly trimmed mean of 1.0-1.1%, above the RBA’s own forecast of 3.8% annually, with the fuel excise reversal in July set to push headline inflation back up regardless of underlying trends

National Australia Bank has added its voice to a growing pre-release consensus on Australia’s April inflation data, forecasting headline consumer prices falling back to 4.4% while warning that underlying price pressures are building in ways the top-line figure will not fully capture.

The April CPI release, published today, is the first to reflect cost pressures flowing from the Middle East conflict into the broader Australian economy. NAB’s forecast aligns closely with those issued earlier by Commonwealth Bank of Australia and Westpac, all three lenders clustering their trimmed mean estimates between 3.4% and 3.5% on an annual basis. That convergence on underlying inflation, even as headline forecasts diverge, points to a shared view that the fuel excise reduction is distorting the signal rather than representing genuine disinflation.

NAB attributes the expected headline decline almost entirely to automotive fuel, which fell around 7% in monthly terms following the government’s temporary 32 cents per litre excise cut introduced in April. The relief is explicitly short-lived. NAB flags that the excise reduction unwinds in July, at which point the headline rate will face upward pressure from the reversal alone, independent of any further deterioration in underlying prices.

The more consequential question for the RBA is what the April data reveals about cost pass-through. NAB’s own business survey data points to a rapid and broad-based surge in input cost pressures that moved from transport and logistics in March into a wider array of industries by April. Purchase cost growth running at 4.5% is outpacing output price growth, with much of the shock currently being absorbed as margin compression. NAB expects some of that pressure to begin appearing in goods and grocery prices in the April figures, marking the start of a pass-through process whose speed and extent remains the central uncertainty in the outlook.

On the RBA’s own benchmarks, the stakes are clear. NAB pencils in quarterly trimmed mean inflation of 1.0% to 1.1% for the second quarter of 2026, a range that sits above the central bank’s forecast of 3.8% on an annual basis. With the RBA having tightened at each of its three meetings this year, today’s print will be closely read for confirmation of whether that trajectory needs to extend further.