![\"economy\"](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/05\/0be44493d1822c9e2a25e784013f07cc.jpeg\")
While headline inflation has dipped, the trimmed mean – watched closely by the RBA – is edging up. (Susie Dodds\/AAP PHOTOS) <\/p>\nA softer-than-expected inflation result will give the Reserve Bank a little more space to leave interest rates on hold, but another hike is not off the cards yet.<\/p>\n
Australia’s annual headline inflation rate fell to 4.2 per cent in April, from 4.6 per cent the previous month, according to the Australian Bureau of Statistics.<\/p>\n
The outcome was weaker than the 4.4 per cent rise forecasters had been expecting.<\/p>\n
At first blush, that seems like good news for the central bank’s battle against inflation.<\/p>\n
While headline inflation has dipped, the trimmed mean – watched closely by the RBA – is edging up. (Susie Dodds\/AAP PHOTOS) <\/p>\n
But the RBA board will be wary of reading too much into one month of data.<\/p>\n
The slowdown was mainly driven by a temporary decline in fuel prices as a result of the government’s fuel excise cut.<\/p>\n
Fuel prices fell seven per cent in the space of one month after a near-33 per cent spike in March.<\/p>\n
But fuel prices were still almost 24 per cent higher than before the Middle East conflict, ABS head of prices statistics Sue-Ellen Luke said.<\/p>\n
“The impact of higher oil prices has also been seen in products and services with high freight and logistics costs, such as parcel delivery and building materials,” she said.<\/p>\n
“This is reflected in price increases of 12.4 per cent for postal services and 4.7 per cent for new dwelling construction compared to 12 months ago.”<\/p>\n
Petrol prices eased in April thanks to a cut in the fuel excise. (Dean Lewins\/AAP PHOTOS) <\/p>\n
As long as the Strait of Hormuz remains closed and supply chains continue to be impacted, the underlying impulse of price pressures – excluding the temporary easing in fuel prices – will continue to grow.<\/p>\n
The trimmed mean, which omits volatile items and gives a better sense of the underlying pulse of price increases, edged up to 3.4 per cent, in line with the consensus of forecasters.<\/p>\n
All up, the inflation data showed inflation pressures have eased but remain strong, Challenger chief economist Jonathan Kearns said.<\/p>\n
“While the direct effect from higher oil prices has eased with the temporary reduction in the fuel excise and a small decline in the margins on refined fuel products, second-round effects from higher fuel prices will add to prices across the economy for months to come,” he said.<\/p>\n
“Without clear evidence of intensifying inflation pressures, it is likely the RBA will pause in June, with a further hike in August remaining possible.”<\/p>\n
The cost of building a new home rose 4.7 per cent in 12 months, in part due to the Iran war. (JASON O\u2019BRIEN\/AAP PHOTOS) <\/p>\n
The Reserve Bank board agreed its latest rate hike gave it more space to see how the Middle East conflict played out, according to minutes from its May meeting.<\/p>\n
Citi analysts Josh Williamson and Faraz Syed estimated \u00a0the trimmed mean was on track to hit 3.7 per cent by mid-year, below the RBA’s 3.8 per cent forecast.<\/p>\n
“So with two months of the quarter to go, the RBA has some more ‘space’,” they said.<\/p>\n
Treasurer Jim Chalmers said it was a very welcome development for inflation to fall more than anticipated, but it remained a challenge for the economy.<\/p>\n
“The fuel tax cuts are a really important part of putting downward pressure on inflation in the near term,” he said.<\/p>\n
“We’re not … expecting to extend it, but we keep it under review, really, from week to week.”<\/p>\n
Higher oil prices have impacted freight and logistics, leading to increased costs all round. (Steven Markham\/AAP PHOTOS) <\/p>\n
Along with a jump in the unemployment rate in April, the softer-than-expected inflation data has caused markets to scale back bets for future interest rates.<\/p>\n
Economists at all four big banks expect the RBA to stay on hold in June, but the door remains open to another rate rise beyond then.<\/p>\n
The rates market was still expecting about 20 basis points of rate hikes by the end of 2026, but that was down from 30 basis points before the release.<\/p>\n","protected":false},"excerpt":{"rendered":"A softer-than-expected inflation result will give the Reserve Bank a little more space to leave interest rates on…\n","protected":false},"author":2,"featured_media":697472,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164,27313,130870,30020,49202,26473,16776,30019],"class_list":["post-697471","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy","tag-fuel-excise","tag-fuel-prices","tag-headline-inflation","tag-inflation-data","tag-oil-prices","tag-reserve-bank","tag-trimmed-mean"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/697471","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=697471"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/697471\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/697472"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=697471"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=697471"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=697471"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}