Australia’s inflation rate remained steady in April, with the Consumer Price Index (CPI) rising 2.4% over the 12 months to April 2025, according to the latest data from the Australian Bureau of Statistics (ABS).
This marks the third consecutive month that annual inflation has held at this level, aligning with the Reserve Bank of Australia (RBA)’s target range of 2-3%.
The trimmed mean inflation, which excludes volatile items and is closely watched by the RBA, edged up slightly to 2.8% year-on-year, from 2.7% in March. This suggests that underlying inflation pressures remain contained, providing the central bank with some flexibility in its monetary policy decisions.
Key drivers of April inflation
The ABS reported that the largest contributors to the annual CPI movement were:
- Food and non-alcoholic beverages: up 3.1% (from 3.4% in March)
- Housing: up 2.2% (from 1.8%)
- Recreation and culture: up 3.6% (from 2.7%)
Within the food category, fruit and vegetable prices rose by 6.1%, while meat and seafood increased by 2.5%.
“While annual inflation eased for most food categories in April, egg prices were up by 18.6% in the past 12 months,” ABS head of price statistics Michelle Marquardt said. “This comes as supply has been affected by bird flu outbreaks.”
Housing costs were influenced by a 5% rise in rents, partially offset by a 6.5% decline in electricity prices, attributed to government rebates.
“Without all the commonwealth and state government rebates, electricity prices would have risen 1.5% in the 12 months to April,” Marquardt said.
Transport costs fell by 3.2%, driven by a 12% decrease in automotive fuel prices, reflecting global market trends.
No panic, but no certainty
The steady inflation figures have reinforced expectations that the RBA will maintain its current policy stance in the near term. However, upcoming economic data, particularly the full gross domestic product (GDP) report for the first quarter, will be closely watched for signs of economic softness that could prompt a policy response.
Josh Gilbert, market analyst at eToro, said the inflation figures underscore the central bank's caution.
“But let's be clear, this isn’t a reason to panic; inflation doesn’t just move in a straight line, one way or the other," he said. "This does mean that the RBA will be on watch and that a rate cut in July is certainly not nailed on. Last week’s rate cut, in which the cash rate decreased to 3.85%, doesn’t necessarily set the stage for back-to-back cuts.
“But inflation remains within the Reserve Bank's target band of 2% to 3%, and the upside risks are clearly receding, which is why the market is pricing three further rate cuts this year,” he added.
Meanwhile, central banks continue to watch for further tariff policy fallout from the US.
“Those tariffs and how they affect global activity and trade have been the biggest worry,” Gilbert said. “However, Donald Trump's willingness to negotiate has, in turn, brought trade truces in recent weeks, and the prevailing view is that the worst of the tariff turmoil may now be behind us.”
Watching the data – and the Fed
Analysts emphasized that while slightly higher than expected, the April CPI reading remains within the RBA’s target range. Dwyfor Evans, head of APAC macro strategy at State Street Markets, also found nothing in the April data that deviates from the RBA’s recent statements.
“Given the continued uncertainty around tariffs, strong jobs market and the base effects pressures in Q3, expect the RBA to maintain its cautious stance on prospective easing,” he said.
Krishna Bhimavarapu, APAC economist at State Street Global Advisors, acknowledged the slight increase in the trimmed mean figure but noted the data are again still in line with the RBA target.
“They key surprise was in the first partial data release for Q1 GDP – the construction work done – which was reported to have stalled (0.0% q/q) against a consensus for a 0.5% rise,” he said. “We increasingly feel that the RBA might cut faster if Q1 GDP data disappoints next week.”