Australia’s Inflation Eases in April, but Underlying Pressures Remain Stubborn

Australia’s inflation rate slowed in April, offering some relief to households as headline consumer prices rose 4.2 per cent annually down from 4.6 per cent in March. A major driver of the slowdown was a sharp 7 per cent fall in automotive fuel prices, following a massive 32.8 per cent surge the previous month.

The drop reflects the federal government’s decision to halve the fuel excise from April 1, a temporary measure designed to shield motorists from the global energy shock.

However, the Reserve Bank’s preferred gauge of underlying inflation the trimmed mean ticked slightly higher, rising from 3.3 per cent to 3.4 per cent over the year to April. Economists say this signals that inflationary pressures remain more persistent than the headline figure suggests, and they expect the RBA to keep interest rates on hold at its next meeting.

ABS head of price statistics Sue‑Ellen Luke said that despite the excise cut, fuel prices are still 23.5 per cent higher than before the Middle East conflict began in February. Those elevated fuel costs are now filtering through the broader economy.

“The impact of higher oil prices has also been seen in products and services with high freight and logistics costs,” Luke said, pointing to 12.4 per cent price rises in postal services and a 4.7 per cent increase in new dwelling construction over the past year.

Economists welcomed the easing in headline inflation but warned that the uptick in underlying inflation shows the battle is far from over. Westpac analysts expect trimmed mean inflation to climb toward 4 per cent in coming quarters well above the RBA’s 2.5 per cent target.

The April data suggests that while inflation is cooling, Australia’s cost‑of‑living pressures remain deeply entrenched, and the path back to target will be slower than many hoped.