Australia Q2 Inflation Surprisingly Slows to 3.9%

The annual inflation rate in Australia eased to 3.9% in Q2 2026, defying market expectations that it would hold at an over two-year high of 4.1% in Q1. Still, it remained well above the central bank's 2-3% target. On a quarterly basis, consumer prices rose 0.6%, slowing from a 1.4% increase in the previous period and coming slightly below expectations for a 0.7% gain. Meanwhile, the trimmed mean measure of annual core inflation, which excludes the most volatile components such as fuel, edged up to 3.6% from 3.5%. The quarterly figure rose 0.8%, unchanged from the previous period but marginally below forecasts for a 0.9% increase.

The annual inflation rate in Australia climbed to 4.1% in Q1 2026 from 3.6% in the previous period but slightly below expectations of 4.2%. This marked the highest level since Q4 2023 and well above the central bank’s 2–3% target, as the war in the Middle East drove up energy costs. On a quarterly basis, consumer prices rose 1.4%, accelerating from a 0.6% gain in Q4 and marking the steepest increase since Q1 2023. Meanwhile, the trimmed mean measure of core inflation, which excludes the most volatile components such as fuel, edged up to 3.5% from 3.4%. The quarterly figure rose 0.8%, slightly below expectations of a 0.9% increase.