24.06.202601:35:30UTC+00Australia Inflation Rate at 3-Month Low of 4%

Australia’s annual inflation rate unexpectedly slowed to 4.0% in May 2026, down from 4.2% in April and below market expectations of 4.4%, though it remained above the Reserve Bank’s 2–3% target range. This was the weakest annual increase since February.

The moderation was driven largely by goods inflation, which eased to 4.2% from 4.7%. Transport costs rose at their slowest pace in three months (3.3% vs 6.6% in April), as automotive fuel prices recorded their smallest increase since February (7.7% vs 18.6%). Inflation also eased in health (3.8% vs 4.0%) and recreation (2.4% vs 2.5%).

By contrast, price growth accelerated for food and non-alcoholic beverages (3.3% vs 2.8%) and housing (6.5% vs 6.3%). Services inflation also edged higher, rising to 3.7% from 3.5%.

Core inflation measures firmed. The trimmed mean CPI rose 3.6% year-on-year, the highest rate since September 2024 and above expectations of 3.5%. The weighted median CPI also increased 3.6%, up from 3.5% in April.

On a monthly basis, headline CPI fell 0.7% in May, marking the first decline since August 2025 and exceeding the anticipated 0.3% drop.