Australia: Inflation unchanged within target in March
Latest reading: Inflation was stable at February’s 2.4% in March, remaining below the midpoint of the 2.0–3.0% target band of the Reserve Bank of Australia (RBA). Looking at the details of the release, transport costs fell at a sharper pace and price pressures for textiles cooled, offsetting a faster rise in food costs.
As a result, the trend pointed down, with annual average inflation inching down to an over three-year low of 2.8% in March from February’s 2.9%. Moreover, the year-on-year trimmed mean—a closely watched measure of core inflation by the RBA—was unchanged at February’s 2.7% in March, remaining within the Central Bank’s target range for the fourth consecutive month.
Lastly, consumer prices rose 0.48% in month-on-month terms in March, accelerating from February’s 0.08% increase.
Outlook: Lower oil prices, a looser labor market and elevated interest rates should be driving down inflation from Q1 in the current quarter. Still, our panel sees price pressures picking up in H2 as domestic demand recovers and the base effect turns less favorable.
In 2025 as a whole, inflation should average within the RBA’s target band for the first time in four years, hovering around its midpoint but outpacing the pre-Covid 10-year average of 2.1%. Faster-than-expected wage growth and supply disruptions amid escalating global trade tensions are upside risks.