Australia’s inflation rate was 3.8% in the year to June, according to new data from the Australian Bureau of Statistics (ABS).
While prices are still rising, the rate of inflation has continued to ease from the three-year high of 4.6% recorded in March, when fuel costs surged amid conflict in the Middle East.
The annual rate has been falling since then, though the pace of decline has slowed.
Here is what you need to know.
Background
Inflation measures changes in the price of goods and services over time.
The ABS calculates the inflation rate – also referred to as the Consumer Price Index (CPI) – by analysing prices across categories including food, housing, and transport.
It is usually an annual rate.
The latest CPI data tells us that prices have increased on average by 3.8% over the year to June, down from 4% for the year to May.
Why?
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Housing, food and recreation were the biggest drivers of inflation in the 12 months to June 2026, according to the ABS.
Housing costs rose 6.8%, driven by higher electricity prices, rents and the cost of building new homes.
Meanwhile, spending on recreation rose 3.3% in June, driven by increased holiday travel to the northern hemisphere, coinciding with the European summer and the men’s football World Cup.
Trimmed mean
The trimmed mean is often seen as a more accurate picture of how inflation is tracking.
This is because it excludes volatile prices, such as petrol, to better understand longer-term changes in prices.
The trimmed mean for June was 3.6%, the same as May.
The trimmed mean is partly what the Reserve Bank of Australia (RBA) looks at to determine the cash rate.
Its target range for the trimmed mean is 2-3%, meaning the rate is too high.
