The annual inflation rate in Australia unexpectedly slowed to 4.0% in May 2026 from 4.2% in April, coming in below expectations of 4.4% but remaining above the central bank’s 2–3% target range. It was the softest increase since February, as goods inflation moderated to 4.2% from 4.7%, with transport costs rising at the slowest pace in three months (3.3% vs 6.6% in April) as automotive fuel prices increased at their softest pace since February (7.7% vs 18.6%). Inflation also eased for health (3.8% vs 4.0%) and recreation (2.4% vs 2.5%). Meanwhile, price growth accelerated for food and non-alcoholic beverages (3.3% vs 2.8%) and housing (6.5% vs 6.3%). Services inflation also picked up to 3.7% from 3.5%. Meanwhile, the trimmed mean CPI rose 3.6% yoy, the highest since September 2024 and above expectations of 3.5%, while the weighted median CPI climbed 3.6%, after a 3.5% rise in April. Monthly, CPI fell 0.7%, the first decline since August 2025, compared with expectations of a 0.3% fall.

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