Australia Inflation Eases Slightly, RBA Holds Rates Longer

Core inflation measures, closely monitored by policymakers, indicated persistent price pressures, with the trimmed mean CPI rising 3.3% year-on-year and the weighted median CPI edging down to 3.5%. Housing remained the largest contributor to annual inflation, increasing 7.2% over the year, driven by higher electricity costs, rents, and new dwelling prices.

Electricity prices surged 37% annually, reflecting the impact of households exhausting government rebates. Food and non-alcoholic beverages prices rose 3.1% from a year earlier, with takeaway meals and red meat prices recording notable increases.

Conversely, transport costs fell 0.2% on the year due to a 7.2% decline in automotive fuel prices, though recent geopolitical tensions cloud the outlook. ABS head of prices statistics Sue-Ellen Luke confirmed annual inflation "eased slightly" while underlying inflation remained steady.

This data reinforces expectations that policymakers will keep interest rates higher for longer to return inflation to target.