CPI Inflation

The headline CPI rose by 0.7% in Q2 2025, taking the annual rate of inflation 0.3 percentage points lower to 2.1%. Trimmed mean CPI, which is the RBA’s favourite underlying price gauge, rose by 0.6% QoQ and 2.7% YoY. The decline in trimmed mean inflation should be enough to secure a 25bps cash rate cut at the Monetary Policy Board meeting on 11-12 August.

The monthly CPI indicator suggested that the annual rate of consumer price inflation fell by 0.3ppts to 2.1% in May. This was a downside surprise to the market participants, who expected a smaller 0.1ppts decline to 2.3%. Annual trimmed mean inflation, which is the RBA’s favoured measure of underlying inflation, fell 0.4ppts to 2.4%, which is the lowest level since November 2021.

The monthly CPI indicator suggested that the annual rate of consumer price inflation in April remained at 2.4% for the third straight month. The underlying inflation measures ticked up in April, but remained within the RBA target range of 2–3%.

The headline CPI rose by 0.9% in Q1 2025, while the annual rate of headline CPI inflation was unchanged at 2.4%. Annual trimmed mean CPI inflation, which is the RBA’s favourite underlying inflation gauge, declined to 2.9% in Q1, thus coming back to the RBA target range.

The monthly CPI indicator suggested that the annual rate of consumer price inflation ebbed 0.1ppts to 2.4% YoY in February, against market expectations of no change. Annual trimmed mean inflation, which is the RBA’s favoured measure of underlying inflation, declined 0.1ppts to 2.7%, which is very close to the mid-point of RBA target range of 2-3%.

The monthly CPI indicator suggested that the annual rate of CPI inflation remained at 2.5% YoY in January, against the market expectations of a 0.1ppts increase to 2.6%. Annual trimmed mean inflation, which is the RBA’s favoured underlying price growth gauge, also picked up 0.1ppts to 2.8%.