Chartpack: Australia CPI - May 2026

Research evidence excerpt

Chartpack: Australia CPI - May 2026

▪ Australia’s May CPI was softer than consensus at the headline, dropping 0.7%mom. Trimmed

mean was 0.1ppts stronger than consensus at 0.4%mom. In year-ended terms, headline at

4.0%, trimmed mean at 3.6%. Driving the headline miss compared to DB’s forecast at -0.4%mom

was a much larger-than-expected drop in domestic travel and accommodation prices (down

12%mom). International travel prices – despite the Iran disruption - also fell 0.8%mom against our

pick of a 2%mom rise.

▪ Trimmed mean inflation (the key indicator for the RBA’s policy outlook) was at 0.38%mom/3.6%yoy.

Based on that, our nowcast for Q2 trimmed mean CPI is at 1.0%qoq, in line with RBA’s forecast as

outlined in the May SMP. Based on the monthly prints so far, trimmed mean inflation would have to

spike sharply higher in June (month) for Q2 CPI trimmed mean to print meaningfully above the RBA’s

May SMP forecast. But by the same token, it would take a plunge in the June monthly print to secure

a miss. Most likely outcome right now is a Q2 print “in line” with RBA’s forecast at 1.0%qoq. In

annualized terms, this is a full percentage point above the top of the RBA’s target band. RBA will take

no comfort in that.

▪ On the shelter inflation measures, new dwelling purchase lifted 0.9%mom, strongest monthly print

since December 2022. A reminder that, unlike the US CPI basket, Australia’s measure of new dwelling

purchase is effectively a producer price series. The ABS note that the rise reflects “project home

builders in most cities (raising) base prices to pass through fuel surcharges and higher material costs.”

Rental inflation also jumped to 0.4%mom, up from 0.2%mom average over prior three months. That is

the highest monthly print since February 2025.

▪ DB’s RBA base case.