Australia’s inflation rate eased in April, offering some relief after months of rising costs, though households are still facing pressure from electricity bills, rents and mortgage repayments.
New figures released on Wednesday showed the Consumer Price Index rose 4.2 per cent in the year to April 2026, down from 4.6 per cent in March. The result came in below market expectations and marks the first meaningful moderation in inflation since the latest surge earlier this year.
Treasurer Jim Chalmers said the easing was welcome but warned inflation remained too high.
“This tick down in inflation is welcome, it remains much higher than we’d like and that’s why it’s a big focus for the government,” he said.
The monthly CPI increase for April was 0.4 per cent, helped by lower petrol prices following the temporary halving of the fuel excise from 1 April. Regular unleaded petrol fell from 228 cents per litre in March to 206 cents in April, while premium unleaded dropped from 250 cents to 228 cents.
The previous month’s inflation spike had been driven largely by fuel costs after conflict in the Middle East sent oil prices sharply higher. Automotive fuel prices rose 32.8 per cent in March, the largest monthly increase since records began in 2017.
Housing remained the largest contributor to inflation, with annual housing costs rising 6.3 per cent in April. Electricity prices were up 25.4 per cent over the year after government rebates introduced during the cost-of-living crisis began to unwind.
For many families across Melbourne’s outer suburbs, including Tarneit, Point Cook and Wyndham, higher energy bills are adding to already stretched household budgets.
Food and grocery prices rose 2.8 per cent annually, while education costs increased 4.8 per cent. Health costs climbed 4.0 per cent and insurance and financial services rose 3.0 per cent.
Economists focused closely on the trimmed mean inflation measure, which strips out volatile items such as fuel. That figure rose slightly from 3.3 per cent to 3.4 per cent annually, remaining above the Reserve Bank of Australia’s target band of 2 to 3 per cent.
“Inflation for April, still too high, but still within the RBA’s expectations…The RBA may indeed choose to pause in June as so far inflation has come close to its most recent forecasts”
Economist Stephen Koukoulas said the data pointed towards a softer inflation outlook and potentially fewer interest rate rises ahead.
“Encouraging news on inflation, prices down 0.1% in April, but annual inflation remains above 4%. The trimmed mean inched up to 3.4% from 3.3% and appears to be consolidating less than 1 percentage point from the 2.5% target of the RBA,” he said.
Koukoulas said economic conditions were beginning to weaken across several areas.
“For the RBA, the rate hike frenzy of the first half of 2026 is over, employment is down, house prices are down, the unemployment rate is up, wages growth is down… and now inflation. It’s rates on hold, markets may start to flirt with a serious interest rate cutting cycle in the not too distant future.”
Alex Joiner, chief economist at IFM Investors, said the figures were largely in line with Reserve Bank expectations.
“Inflation for April, still too high, but still within the RBA’s expectations,” he said. “The RBA may indeed choose to pause in June as so far inflation has come close to its most recent forecasts.”
AMP chief economist Shane Oliver said falling fuel prices had helped soften the headline figure but warned underlying pressures remained.
“Supports view the RBA will hold in June,” Oliver said, “but rise in trimmed mean likely leaves it on track to hike again.”
Scott Phillips said inflation was still well above comfortable levels despite the improvement.
“CPI coming down looks good. Two things, though: down from 4.6% to ‘only’ 4.2% is still far too high. Trimmed mean rose from 3.3% to 3.4%. More to do. The RBA won’t be happy, though that doesn’t mean they’ll lift rates, necessarily.”
The Reserve Bank has already lifted interest rates three times in 2026, responding to renewed inflation pressures linked partly to the Middle East conflict and energy markets.
Markets are now watching developments overseas closely after reports emerged that the United States and Iran may be nearing a deal that could reduce tensions and stabilise oil prices.
For borrowers across Australia, especially families carrying large mortgages in growth corridors, the latest inflation figures may offer early signs that the sharpest phase of the cost-of-living squeeze is beginning to ease, even if financial pressure remains widespread.
Support independent community journalism. Support The Indian Sun.
Follow The Indian Sun on X | Instagram | Facebook
Support Independent Community Journalism
Dear Reader,The Indian Sun exists for one reason: to tell stories that might otherwise go unheard.
We report on local councils, state politics, small businesses and cultural festivals. We focus on the Indian diaspora and the wider multicultural community with care, balance and accountability. We publish in print and online, send regular newsletters and produce video content. We also run media training programs to help community organisations share their own stories.
We operate independently.
Community journalism does not have the backing of large media corporations. Advertising revenue fluctuates. Platform algorithms change. Costs continue to rise. Yet the need for credible, grounded reporting in a multicultural Australia has never been greater.
When you support The Indian Sun, you support:
• Independent reporting on issues affecting migrant communities
• Coverage of local and state decisions that shape daily life
• A platform for small businesses and community groups
• Media training that builds skills within the community
• Journalism accountable to readers
We cannot cover everything, but we work to cover what matters.
If you value thoughtful reporting that reflects Australia’s diversity, we invite you to contribute. Every donation helps us maintain the quality and consistency of our work.
Please consider making a contribution today.
Thank you for your support.
The Indian Sun Team
