Australia Inflation Expectations Hit 3-Month Low

Australia’s consumer inflation expectations stood at 4.6% in January 2026, little changed from 4.7% in the previous month, signaling households still foresee heightened price pressures. The latest reading followed the Reserve Bank of Australia’s decision to leave the cash rate unchanged at 3.6% for a third straight meeting in December. During the gathering, policymakers noted inflation has eased sharply from its 2022 peak, though recent data show renewed momentum. Headline CPI slowed to 3.4% yoy in November, the lowest since August, but remained above the RBA’s 2–3% target. Trimmed mean CPI also moderated to 3.2% from October’s eight-month high of 3.3%. Governor Michele Bullock recently highlighted that September-quarter inflation was slightly stronger than expected, with temporary factors at play but signs of persistence across components. The board judged risks to inflation have tilted modestly upward, while downside risks, particularly from overseas, have eased.

Australia’s consumer inflation expectations increased to 4.7% in December 2025 from November’s three-month low of 4.5%, reflecting broader and persistent price pressures. The rise followed the Reserve Bank’s decision earlier this month to hold its cash rate steady at 3.6% for a fourth straight meeting. Governor Michele Bullock recently noted that Q3 inflation was slightly stronger than anticipated, with some temporary drivers but also signs of persistence in certain categories. She highlighted the timing of electricity rebates, which temporarily suppress headline inflation but push it higher once they expire. Meanwhile, annual inflation accelerated to 3.8% in October from 3.6%, the highest in ten months and still above the RBA’s 2–3% target range. Bullock viewed that if inflation proves persistent and fails to return toward the intended corridor, it could raise concerns over financial conditions and prompt the board to consider holding rates steady or eventually lifting them.

Consumer inflation expectations in Australia dropped to 4.5% in November 2025 from 4.8% in the previous month, marking the lowest reading since August, as cost pressures eased from their 2022 peak despite a temporary uptick in September. The latest result followed the central bank's decision earlier in the month to keep its cash rate unchanged at 3.6% after three cuts this year. The moderation in expectations came even as recent data showed headline inflation jumping to 3.2% in Q3, the highest since Q2 2024, while the trimmed-mean CPI—the RBA’s preferred core gauge—rose to 2.7%, also the highest since Q4 2024. Meanwhile, monthly CPI climbed 3.5% year-on-year in September, marking the fastest pace in 14 months. The overall trend suggested that households expect slower price growth ahead despite lingering price pressures, while policymakers maintained a cautious stance as inflation remains above target.