Core inflation in Australia slowed to its lowest level in more than three years in May, according to official data released Wednesday, adding to signs of easing price pressures across the economy.
The trimmed mean consumer price index rose 2.4% from a year earlier, down from 2.8% in April and below the mid-point of the Reserve Bank of Australia’s 2–3% target range.
Headline inflation also slowed, with the monthly consumer price index rising 2.1% in May compared to a year ago, down from 2.4% in April and below expectations of 2.3%. On a monthly basis, the CPI fell 0.4%, driven by lower petrol prices and softer housing costs.
Services inflation eased to 3.3% from 4.1% in April, while rents rose 4.5%, the slowest annual pace since December 2022. New dwelling prices were flat in the month.
Prices for holiday travel and accommodation dropped 7%, reversing a 6% increase in April.
The slowdown in inflation comes as the Australian economy shows signs of softening. Growth was weak in the first quarter as consumers reduced spending, reflecting caution over trade risks and broader global uncertainty.
Consumption and activity in the second quarter also appear subdued.
Labour market data remains stable. The unemployment rate is at 4.1%, and job ads are holding above pre-pandemic levels. Wage growth in the private sector continues to stay moderate.
The Reserve Bank of Australia is scheduled to announce its next policy decision on July 8. Market pricing suggests rising expectations of policy easing as inflation moves further within target.
