Inflation moderated in April as lower fuel and public transport costs flowed through to cheaper consumer prices, offering some near-term cost of living relief for Australian households.
Data published by the Australian Bureau of Statistics showed headline consumer price inflation slowed to 4.2 per cent over the year to April, a rate slightly below what analysts had been expecting. The easing was largely driven by a sharp fall in fuel prices following the temporary fuel excise reduction, alongside sizeable declines in urban public transport fares in several states.
“Lower fuel and transport costs have taken some pressure off headline inflation, but underlying inflation remains firm,” CommBank Senior Economist Trent Saunders said.
“That suggests domestic price pressures are still running hotter than the Reserve Bank of Australia would like, even as some cost relief shows up in the monthly data.”
Transport prices fell 2.7 per cent in April, led by a 7 per cent drop in fuel prices and an almost 20 per cent fall in urban transport costs. The fuel excise cut, introduced on 1 April and due to remain in place until 30 June, was a key driver of lower petrol prices during the month.
Despite this, the RBA’s preferred measures of underlying inflation, which removes the most volatile price movements, showed little improvement. Trimmed mean inflation rose by 0.3 per cent over the month, lifting the annual pace to 3.4 per cent. Market services inflation, a key gauge of domestically driven price pressures, also remained elevated at 3.7 per cent.
Housing-related costs were mixed. New dwelling prices rose 0.7 per cent in April, pushing annual new dwelling inflation up to 4.7 per cent, its fastest pace since August 2024.
While construction input costs have increased, evidence suggests only modest pass-through to buyers so far. Rent inflation remained steady at 0.2 per cent over the month, partly restrained by the biannual indexation of Commonwealth Rent Assistance.
Overall, the April CPI data supports expectations that the RBA will keep interest rates on hold in the near term, as softer activity indicators begin to offset ongoing inflation risks.
See Trent Saunders’ full report here.
