Australian Inflation Slows in May, but Underlying Pressures Rise
Quick Look
- Australian headline inflation decreased to 4% in May, down from 4.2% in April.
- However, the RBA's preferred trimmed mean inflation measure rose to 3.6%, its highest annual pace since Q3 2024, signaling persistent underlying price pressures.
AI-generated summary
Why It Matters
Headline inflation in Australia decelerated in May, but underlying inflation measures show persistent price pressures. The RBA anticipates higher inflation due to global energy shocks.
Headline inflation decelerated again in May, with consumer prices increasing at an annual pace of 4 per cent, down from 4.2 per cent in April.
But trimmed mean inflation, the Reserve Bank's preferred measure of underlying inflation, increased to 3.6 per cent, up from 3.4 per cent in April.
Underlying inflation allows economists to look beneath the daily noise of random price movements to see what the economy's broader inflationary pressures are looking like.
The Bureau of Statistics says underlying inflation is now running at its highest annual pace since the September quarter of 2024.
The RBA has warned that inflation will trend higher in coming months as the fallout from the global energy shock works its way through Australia's fuel prices and supply chains.
What to Watch
AI outlook — possibilities, not facts
Inflation to trend higher in coming months.
Likely · Within months
Open Questions
- Will the RBA adjust interest rates?
- How long will global energy shocks persist?