Australia April CPI slows to 4.2%, core inflation creeps higher

Australia's headline consumer price index rose 4.2% year-on-year in April, down from 4.6% in March and below the 4.4% consensus forecast. The core inflation measure, which excludes volatile items, edged up to 3.4% from 3.3%, matching expectations and reaching its highest level since 2024. The data prompted a modest decline in the Australian dollar as markets reassessed the near-term rate outlook.

For interest rate traders, the mixed print complicates the Reserve Bank of Australia's policy path. While the headline slowdown suggests disinflation is underway, the stickiness of core inflation — now at its highest in over a year — signals that underlying price pressures remain entrenched. The RBA has held the cash rate at 4.35% since November 2024, and markets had been pricing in a first cut by late 2026. Today's data may delay those expectations, as the central bank has repeatedly stressed the need to see sustained progress on core inflation before easing. Traders can track live rate expectations and yield moves on NowPrice's RBA rate monitor dashboard.

Looking ahead, the next key data point is the monthly CPI indicator for May, due in late June, which will show whether the disinflation trend continues. The RBA's next policy meeting is scheduled for July 7-8, and markets will scrutinize the board's statement for any shift in tone. If core inflation remains elevated, the RBA may be forced to maintain its hawkish stance, keeping the cash rate at restrictive levels through the third quarter.