Free Australian Inflation Calculator

Inflation is an increase in the general level of prices of goods and services over time. When inflation rises, each dollar you have buys fewer goods and services than before – this is called a decline in purchasing power. For example, if inflation is 3%, something that cost $100 last year would cost $103 this year. The Reserve Bank of Australia aims to keep inflation between 2–3% because low and stable inflation supports sustainable economic growth and helps households and businesses plan for the future.

The Consumer Price Index (CPI) is Australia's principal measure of household inflation. It tracks the percentage change in the price of a "basket" of goods and services that Australian households typically buy. The CPI covers 11 major categories including Housing, Food, Transport, Health, and Recreation. The Australian Bureau of Statistics (ABS) calculates the CPI by collecting thousands of prices from retailers across Australia's eight capital cities. From November 2025, the CPI is published monthly (previously quarterly).

The CPI basket includes 87 expenditure classes across 11 groups. For 2025, the largest weights are: Housing (21.4%), Food & non-alcoholic beverages (17.4%), Recreation & culture (12.7%), and Transport (11.5%). These weights reflect how much Australian households spend on each category – items households spend more on have larger weights in the CPI. The ABS updates these weights annually using data from the Household Expenditure Survey to ensure the CPI reflects current spending patterns.

The Reserve Bank of Australia aims to keep annual consumer price inflation between 2–3% on average, over time. This target is agreed with the Australian Government and recorded in the Statement on the Conduct of Monetary Policy. The RBA believes this range preserves the purchasing power of money while supporting sustainable economic growth. The target is "flexible" – the RBA looks through temporary price movements and focuses on returning inflation to the midpoint (2.5%) of the target range over a reasonable timeframe.

As of October 2025, the annual CPI inflation rate was 3.8% (up from 3.6% in September). Underlying inflation (trimmed mean) was 3.3%. The largest contributors to annual inflation were Housing (+5.9%), Food & non-alcoholic beverages (+3.2%), and Recreation & culture (+3.2%). Headline inflation has fallen substantially from its peak of 7.8% in December 2022, though it remains slightly above the RBA's 2–3% target range.

Headline inflation is the total CPI change – it includes all items in the basket, including volatile ones like fuel and fresh produce. Underlying inflation (primarily the "trimmed mean") removes items with the largest price changes each period to show the underlying trend. The trimmed mean calculates the average inflation rate after removing the top and bottom 15% of price changes. This helps policymakers see through temporary price spikes (like a cyclone affecting fruit prices) to understand persistent inflation pressures.

Inflation has three main causes: 1) Demand-pull inflation – when demand for goods/services exceeds supply, allowing businesses to raise prices. 2) Cost-push inflation – when production costs rise (e.g., wages, energy, raw materials), businesses pass these on to consumers. 3) Inflation expectations – if people expect prices to rise, they may demand higher wages or raise prices preemptively, making inflation self-fulfilling. Recent Australian inflation was driven by supply chain disruptions, the Ukraine war affecting energy prices, and strong post-COVID demand.

The RBA's primary tool is the cash rate – the interest rate on overnight loans between banks. When inflation is too high, the RBA raises the cash rate. This makes borrowing more expensive, reducing household and business spending, which slows demand and eases price pressures. When inflation is too low, the RBA lowers rates to encourage spending. In May 2025, the RBA cut the cash rate to 3.85% after inflation fell to 2.4% (within the target band) following a series of rate increases that began in 2022.

Housing is the largest contributor to CPI inflation. In the 12 months to October 2025, Housing rose 5.9%, driven by: Electricity (+37.1%) – though this reflects the unwinding of government rebates, not just price rises; and Rents (+4.2%) – due to low vacancy rates and strong population growth. New dwelling prices rose 1.7% as builders reduced promotional offers. Rental inflation has moderated slightly as vacancy rates increase and Commonwealth Rent Assistance payments rose 10% in September 2024 (on top of CPI indexation).

Food & non-alcoholic beverages rose 3.2% in the year to October 2025. Key drivers include: Lamb & goat (+14.6%) and Beef & veal (+10.5%) due to strong overseas demand for Australian red meat; Fruit (+3.1% in October) with higher prices for strawberries, raspberries, and apples; and Meals out & takeaway (+3.6%) reflecting elevated costs for labour and ingredients. Overall food inflation has stabilised around 3% for the past 12 months after peaking higher in 2022–2023.

The CPI measures what households actually pay ("out-of-pocket" costs), so government subsidies directly reduce measured inflation. The Energy Bill Relief Fund (EBRF) rebates temporarily lowered electricity costs – headline CPI has been lower than underlying inflation because of these rebates. As rebates end or unwind (scheduled for 2025), electricity costs rise in the CPI even if underlying prices haven't changed. In October 2025, electricity was up 37.1% annually, largely due to rebate timing differences compared to the previous year.

Tradable items are goods that can be imported or exported (e.g., cars, electronics, clothing). Their prices are influenced by global supply chains, exchange rates, and international competition. Non-tradable items are services produced and consumed locally (e.g., rent, haircuts, restaurant meals). Their prices depend more on domestic wages and local conditions. Recently, non-tradable (services) inflation has been more persistent than tradable (goods) inflation, reflecting tight labour markets and strong domestic demand.

From 26 November 2025, the ABS transitioned from quarterly to monthly CPI as Australia's primary measure of headline inflation. This provides more timely data for policymakers, businesses, and households. The complete Monthly CPI covers 87% of the basket with monthly price collection (compared to 50% in the previous monthly indicator). Australia was one of the only developed countries still using quarterly CPI as its primary measure. The quarterly CPI will continue to be published as an average of the three monthly figures.

Not exactly. The CPI measures price changes for a fixed basket of goods, while cost-of-living measures show the change in spending needed to maintain a given standard of living. For example, if beef prices rise, the CPI records this increase, but a cost-of-living measure might account for households switching to cheaper chicken. The ABS publishes separate Selected Living Cost Indexes (SLCIs) for different household types (employees, pensioners, self-funded retirees, etc.) that better reflect actual cost-of-living changes.

As of May 2025, the RBA cash rate target is 3.85%. The RBA lowered the rate by 25 basis points in May 2025 after cutting it to 4.10% in February 2025 – the first cuts since the rate-hiking cycle that began in May 2022 (when rates were 0.1%). The RBA Board judged that with inflation back within the 2–3% target band and risks more balanced, it was appropriate to ease monetary policy. However, rates remain restrictive to ensure inflation stays contained.

Australia's highest recorded annual CPI inflation was 23.9% in the December quarter of 1951, during the Korean War commodity boom. More recently, inflation peaked at 7.8% in the December quarter of 2022 – the highest since 1990. This 2022 peak was driven by global supply chain disruptions, the war in Ukraine, and strong post-pandemic demand. Since then, inflation has fallen substantially to be within or close to the RBA's 2–3% target range by early 2025.

Inflation expectations are what households, businesses, and financial markets believe will happen to prices in the future. They matter because expectations can become self-fulfilling. If workers expect high inflation, they'll demand higher wages; if businesses expect costs to rise, they'll raise prices preemptively. This "inflation psychology" can entrench high inflation. The RBA closely monitors expectations and aims to keep them "anchored" around the 2–3% target. Well-anchored expectations make it easier to control actual inflation.

Inflation erodes the real value of money. If you have $10,000 in a savings account earning 2% interest but inflation is 4%, your money's purchasing power actually decreases by 2% per year. To maintain purchasing power, your investments need to earn a return above the inflation rate (a positive "real return"). Assets like shares, property, and inflation-linked bonds may offer some protection, while cash savings can lose value in real terms during high inflation periods. Superannuation returns are also measured in real (after-inflation) terms.

According to the RBA's May 2025 Statement on Monetary Policy, underlying inflation is expected to remain around the midpoint of the 2–3% target range throughout most of the forecast period. Headline inflation dipped to 2.4% in early 2025 (within the target band) but is expected to rise temporarily when cost-of-living support measures (like electricity rebates) end. The RBA expects inflation to settle around target from 2026 onwards, assuming no major shocks. The labour market and global trade tensions remain key uncertainties.

An inflation calculator helps you understand how prices have changed over time. You can use it to: 1) Calculate what something that cost $100 in 1990 would cost today (adjusting for inflation); 2) See how much your salary needs to increase to maintain the same purchasing power; 3) Understand the real value of historical prices. The RBA and ABS publish historical CPI data back to 1948. Our free inflation calculator uses official ABS data covering 44+ years of Australian inflation history.