Australia Inflation Gauge Eases

Australia’s Melbourne Institute Monthly Inflation Gauge rose 0.5% month-on-month in August 2026, slowing from a 1.0% increase in the previous month and marking the second straight month of growth. The moderation suggested price pressures are moderating from their March peak, although underlying inflation remains elevated. The Reserve Bank of Australia’s August meeting minutes noted that underlying price growth had eased slightly from late 2025 levels, but inflation remained “too high.” Officials also highlighted upside risks from the Middle East conflict, the global AI boom and weak productivity growth. Meanwhile, annual inflation eased to 3.5% in July from 3.8% in June, the lowest in eight months, but remained above the RBA’s 2–3% target range. The central bank expects inflation to return to target only gradually, by late 2027, keeping the outlook for monetary policy cautious.

Australia's Melbourne Institute Monthly Inflation Gauge rose 1.0% month-on-month in July 2026, reversing a 0.4% decline in June and marking its first increase since April, pointing to renewed inflationary pressures. The reading aligns with the Reserve Bank of Australia's June meeting minutes, which indicated that underlying price pressures were expected to intensify in the June quarter. Official data showed headline inflation eased to 3.8% in June from May's 4.0%, mainly due to lower fuel prices. However, underlying inflation remained persistent, with the trimmed mean accelerating to 3.6% from 3.4% as businesses passed through higher costs linked to Middle East tensions. Governor Michele Bullock recently reiterated that underlying inflation remains too high and warned it could rise further as higher oil prices stemming from the Iran conflict feed into broader prices, reinforcing expectations that the RBA will remain cautious on policy easing.

Australia’s Melbourne Institute Monthly Inflation Gauge fell 0.4% month-on-month in June 2026, following a 0.3% decline in the previous month and marking its second consecutive monthly decrease. It was also the third monthly drop this year, pointing to easing price pressures across a broad range of goods and services. Recent data showed annual inflation slowed to 4.0% in May from 4.2% in April, as automotive fuel prices rose at a slower pace following the reduction in the fuel excise. Despite the moderation, inflation remained well above the central bank’s 2–3% target range, with underlying price pressures expected to strengthen in the June quarter.