Prices increased by 4.2% in the year to April 2026, the Australian Bureau of Statistics (ABS) has announced.
It comes after annual inflation reached a three-year high of 4.6% in March, driven largely by the surging cost of fuel brought on by the conflict in the Middle East.
In this month’s Federal Budget, the Government predicted inflation would peak at 5% in the middle of the year.
While the overall rate fell, the trimmed mean (excluding highly changeable prices such as petrol) rose from 3.3 to 3.45%.
Inflation
Inflation measures changes in the price of goods and services over time.
The ABS calculates the inflation rate –also referred to as the Consumer Price Index (CPI) – by analysing prices across categories including food, housing, and transport. It is usually an annual rate.
The latest CPI data tells us that prices have increased on average by 4.2% over the year to April, down from 4.6% for the year to March.
Why the decrease?
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Housing and transport were the biggest contributors to inflation in the 12 months to April 2026, according to the ABS.
Housing costs increased 6.3%, driven by rises in the cost of power, new houses, and rent.
Transport costs (+6.6%) included the rising cost of fuel. Measured across the year, fuel got 18.6% more expensive.
Trimmed mean
The trimmed mean is often seen as a more accurate picture of how inflation is tracking. This is because it excludes volatile prices, such as petrol, to better understand longer-term changes in prices.
The trimmed mean for April was 3.4%, up from 3.3% in March.
The trimmed mean is partly what the Reserve Bank of Australia (RBA) looks at to determine the cash rate.
Its target range for the trimmed mean is 2-3%, meaning the rate is too high.
