CPI rose by 4% in the 12 months to May
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The news: The consumer price index (CPI) increased by 4% in the 12 months to May 2026, below the 4.4% market consensus expectation.
Trimmed mean inflation for the 12 months to May came in at 3.6%, ahead of the market consensus expectations for a 3.5% increase. Automotive fuel has been excluded from this measure since March amid volatility in fuel prices following the US-Iran war.
The numbers: The CPI increase in the year to May was lower than the 4.2% increase in the year to April and the 4.6% increase in the year to March.
Trimmed mean inflation in the year to May was higher than the 3.4% increase to April and the 3.3% increase to March.
Over the year, housing (+6.5%) was the largest contributor to annual inflation, followed by food and non-alcoholic beverages (+3.3%) and transport (+3.3%).
Housing inflation reflects rising costs for electricity, new dwellings and rents. Electricity costs are 21.1% higher than a year as Commonwealth and state government rebates are no longer in place.
Automotive fuel prices fell 11.9% in the month to May after falling 7% in April.
CPI fell 0.7% on a month-to-month basis in original terms and fell 0.1% in seasonally adjusted terms.
The context: The May inflation data is the second set to include the impact of the federal government’s temporary halving of the fuel excise. While the 32-cent per litre cut will expire on 1 July, it will be replaced by a lower 16-cent cut until 2 August.
The RBA has lifted interest rates on three occasions this year before holding steady following the latest monetary policy board meeting in mid-June.
However, RBA governor Michele Bullock warned that “we still think that there are risks to the upside” due to the lingering impacts of the recent fuel shock on the price of other goods and the persistence of domestic inflation pressures before the US-Iran war.
The sources: ABS media release, ABS data
