Australian Inflation Calculator

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 typically purchased by Australian households.

The CPI covers 11 major groups 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. Since 26 November 2025, the ABS has published the CPI monthly as Australia's primary measure of headline inflation.

The annual CPI inflation rate was 3.8% in the 12 months to June 2026 (released 29 July 2026), down from 4.0% in the year to May 2026. The April easing was driven largely by a fall in automotive fuel prices following the Federal Government's fuel-excise reduction.

The largest contributors to annual inflation were Housing (+6.3%), Transport (+6.6%), and Food and non-alcoholic beverages (+2.8%). Underlying inflation (trimmed mean) was 3.6%, unchanged from May 2026. The next CPI release is scheduled for 30 September 2026.

The CPI basket is grouped into 87 categories (expenditure classes) across 11 groups. Under the 2025 weight update (in force throughout 2026), the largest weights are:

• Housing: 21.39%
• Food & non-alcoholic beverages: 17.44%
• Recreation & culture: 12.74%
• Transport: 11.45%

Weights reflect the share of total household expenditure on each category. The ABS has confirmed the next CPI weight update will take effect in January 2027 (scheduled for release on 24 February 2027); the 2026 weight update was postponed after the ABS determined household spending patterns had not changed sufficiently to warrant a mid-2026 update.

Headline inflation is the total CPI change — it includes all items in the basket, including volatile components like fuel and fresh produce.

Underlying inflation (primarily the "trimmed mean") removes the 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 by weight.

This helps the RBA see through temporary price spikes — like the March 2026 fuel surge from the Middle East conflict — to understand persistent inflation pressures. In March 2026, headline inflation was 4.6% but trimmed mean was 3.3%.

From 26 November 2025 (for the October reference month), the ABS transitioned from quarterly to a complete Monthly CPI as Australia's primary measure of headline inflation. This delivers more timely data for policymakers, businesses, and households.

Under the previous monthly indicator, around 50% of the CPI basket was collected each month; the complete Monthly CPI expands monthly collection across the basket. A parallel quarterly CPI series continues to be produced.

Not exactly. The CPI measures price changes for a fixed basket of goods. Cost-of-living measures show the change in spending needed to maintain a given standard of living.

For example, if beef prices rise sharply, the CPI records the price change. A cost-of-living measure might allow for households substituting cheaper protein sources. The ABS publishes separate Selected Living Cost Indexes (SLCIs) for different household types — employees, age pensioners, self-funded retirees, and others — that better reflect actual cost-of-living changes for those groups.

The Reserve Bank of Australia targets 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 considers this band consistent with preserving the purchasing power of money while supporting sustainable economic growth. The target is "flexible" — the RBA looks through temporary price movements and aims to return inflation to the midpoint (2.5%) over a reasonable timeframe.

The RBA cash rate target is 4.60%, effective 30 September 2026.

The Reserve Bank cut rates three times in 2025 — February (to 4.10%), May (to 3.85%), and August (to 3.60%) — the first cuts since the rate-hiking cycle that began in May 2022. After holds in October, November, and December 2025, the Board reversed course with a series of hikes:

• February 2026: hiked 25 bp to 3.85%
• 17 March 2026: hiked 25 bp to 4.10%
• 5 May 2026 (effective 6 May): hiked 25 bp to 4.35%
• 29 September 2026 (effective 30 September): hiked 25 bp to 4.60%

The Board held the cash rate at 4.35% on 16 June 2026 and 11 August 2026 before the September increase. The next decision is scheduled for 3 November 2026. The Board moved to an eight-meetings-per-year schedule in 2024.

The RBA's primary tool is the cash rate — the interest rate on overnight unsecured loans between banks. When inflation is too high, the RBA raises the cash rate. Higher rates make borrowing more expensive, reduce household and business spending, slow demand, and ease price pressures.

When inflation is too low, the RBA lowers rates to encourage spending. Changes in the cash rate flow through to variable mortgage rates, deposit rates, and ultimately to consumption, investment, and the exchange rate.

Headline inflation dipped to 2.4% in early 2025 (within the 2–3% band) but picked up again through the second half of 2025 and into 2026, peaking at 4.6% in March 2026 before easing to 3.8% by June 2026.

The increase has been amplified by the surge in fuel prices following the Middle East conflict and the unwinding of government electricity rebates. The RBA's March 2026 statement noted that inflation is likely to remain above target for some time, with risks tilted to the upside. The RBA's May 2026 Statement on Monetary Policy projects underlying inflation easing towards the 2.5% midpoint of the target band by mid-2028.

The cash rate sets the floor for variable lending rates. When the RBA raises the cash rate, lenders typically reprice variable mortgage rates following the decision, lifting monthly repayments. Conversely, rate cuts reduce repayments.

Fixed rates are priced separately based on bond market expectations and may move ahead of cash rate decisions. The full effect of cash rate changes typically flows through to household budgets over several months.

Housing is the largest contributor to CPI inflation, accounting for 21.39% of the basket. In the 12 months to March 2026, the Housing group rose 6.5%, with key drivers:

• Electricity: sharply higher annual rises through 2026 reflecting the unwinding of government rebates (the Energy Bill Relief Fund and various State Government rebates).
• Rents: elevated due to historically low vacancy rates and strong population growth, partially moderated by Commonwealth Rent Assistance increases.
• New dwellings: builders raising base prices in response to increased demand.

Automotive fuel prices rose sharply through early 2026 — up 32.8% in the month of March 2026 — driven by the conflict in the Middle East pushing global oil prices materially higher. This single-category move was the primary reason headline inflation jumped from 3.7% (February) to 4.6% (March 2026).

In April 2026, fuel prices fell about 7.0% over the month following the Federal Government's fuel-excise reduction, helping headline inflation ease back to 4.2%. Because the trimmed mean trims out volatile fuel movements, it was less affected — edging up to 3.4% in April as broader price pressures persisted.

That spike has since unwound. Fuel fell a further 10.9% in the month of June 2026 as world oil prices retreated following some stabilisation in the Middle East, leaving automotive fuel 7.3% lower over the year to June. The Transport group is now up just 0.1% annually, and headline inflation has eased to 3.8% with the trimmed mean steady at 3.6%.

The CPI measures what households actually pay (out-of-pocket costs), so government subsidies directly reduce measured inflation. The Energy Bill Relief Fund (EBRF) and various State Government rebates temporarily lowered electricity costs in the CPI through 2024–2025.

As those rebates wind back or cycle out, electricity costs rise sharply in the CPI even when underlying wholesale prices have not changed. This is one reason headline inflation has accelerated faster than underlying inflation in 2026 — the rebate base effect inflates the annual electricity comparison.

Food and non-alcoholic beverages rose 3.1% in the year to March 2026 — broadly stable around 3% over the past 12 months after peaking higher in 2022–2023. Key drivers include:

• Beef and lamb: elevated prices due to strong overseas demand for Australian red meat.
• Meals out and takeaway: rising labour costs and ingredient prices have continued to pass through.
• Fruit and vegetables: typically the most volatile food sub-group, with seasonal weather events affecting supply.

Inflation erodes the real value of money. If a savings account earns 3% interest while inflation is 3.8%, the real return is negative — purchasing power decreases by approximately 0.8% over the year.

To preserve purchasing power, returns must exceed the inflation rate (a positive "real return"). Some assets — including shares, property, and inflation-linked bonds — have historically offered some inflation protection, while cash savings can lose real value during periods of high inflation. Superannuation returns are also typically reported in real (after-inflation) terms over the long run.

An inflation calculator helps illustrate how the value of money has changed over time. Common uses include:

• Calculating what an item that cost AUD 100 in 1990 would cost today, adjusted for inflation.
• Estimating how much a salary needs to increase to maintain the same purchasing power.
• Understanding the real value of historical prices when reading historical financial information.

The Money Snap calculator above uses official ABS Long-Term Linked CPI data covering 124 years (1901–2025).