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Australia’s consumer price inflation slowed more than expected in April, offering temporary relief to households and businesses as fuel prices retreated from recent highs. However, underlying inflationary pressures remained persistent, reinforcing expectations that the Reserve Bank of Australia (RBA) could maintain a hawkish monetary policy stance in the months ahead.
According to data released by the Australian Bureau of Statistics (ABS) on Wednesday, Australia’s Consumer Price Index (CPI) rose 4.2% year-over-year in April. The figure came in below market expectations of 4.4% and eased from the previous month’s 4.6% increase.
The softer inflation reading was largely driven by declining fuel costs after global oil prices pulled back from their March peaks. Market optimism surrounding a possible U.S.-Iran peace agreement contributed to lower crude oil prices worldwide. In addition, the Australian government’s decision to halve fuel excise duties helped reduce pressure on energy-related expenses.
Despite the moderation in headline inflation, core inflation remained elevated. The trimmed mean CPI, a key measure closely monitored by the RBA, increased slightly to 3.4% in April from 3.3% in March. The rise indicates that underlying price pressures in the Australian economy are still strong.
Fuel prices also continued to impact broader sectors, including transportation, freight, and construction. ABS data showed fuel costs remained 23.5% higher than pre-war levels, highlighting the ongoing economic effects of geopolitical tensions linked to the U.S.-Israel conflict involving Iran.
The latest inflation data is expected to support the RBA’s cautious approach toward interest rates. Australia’s central bank has already raised rates by a cumulative 75 basis points this year to combat persistent inflation.
Meanwhile, the AUD/USD currency pair traded slightly lower following the release, while investors continued monitoring the Australian economy, inflation trends, and global energy market developments closely throughout 2026.
