Fin-X Rapid Response 29th April 2026

Australian annual CPI inflation jumped sharply to +4.6% in March 2026 but came in below estimates, as housing and recreation offset some of the energy-related increase in transportation costs.

• Australian annual consumer price inflation jumped sharply to +4.6% in the 12 months to March 2026, up from 3.7% in February, according to the ABS today. The consensus forecast was for an increase of +4.8% yoy, according to Bloomberg.

• Quarterly inflation hit +1.4%, up from +0.6% qoq in December.

• The quarterly trimmed mean measure of core inflation rose by +3.5% yoy and +0.8% qoq, up from +3.4% yoy and surpassing the RBA's 25 to 3% target, but slightly lower for the quarter at +0.8% compared to December's +0.9%.

• Transport costs surged +8.9% annually, driven almost entirely by automotive fuel, which experienced an extraordinary +32.8% monthly increase in March.

• Housing costs increased +6.5% yoy, with electricity costs rising +25.4% yoy, though this was down from +37.0% yoy in February. The ABS noted: "The annual rise in electricity costs is primarily related to Commonwealth and State Government electricity rebates being used up by households". Excluding rebate impacts, electricity prices rose just +3.9% yoy.

• Rental costs rose +3.7% yoy, continuing to reflect low vacancy rates across capital cities. The Commonwealth Rent Assistance biannual indexation occurred on March 20, 2026.

• New dwelling prices increased +4.5% yoy, up from +3.7% in February, as project home builders passed through higher labour and material costs.

• Food and non-alcoholic beverages rose +3.1% yoy, unchanged from February. 

• Clothing and footwear spiked +7.1% yoy, up sharply from +5.0% in February, with accessories rising +18.6% due to higher gold and silver jewellery prices.

• Education costs increased +4.8% yoy, with secondary education up +6.6%.

• Annual goods inflation accelerated sharply to +5.5% from +3.5% in February, primarily due to automotive fuel. Services inflation eased to +3.6% yoy from +3.9% yoy, with medical and hospital services (+3.8%) and rents (+3.7%) as the main contributors.

  S&P/ASX200 8,686.1 -0.3%, AUDUSD 0.7164 -0.01%, Aus 10yr 5.0% -2bps

Fin-X Wealth View

• The March quarter inflation spike was largely driven by a supply shock that raised fuel prices, while underlying core inflation measures remained stable. 

• Further price increases are likely to flow through from fuel costs and the impact of higher fertiliser costs on food prices. The impact can already be seen in goods prices, which are likely to lead services prices higher with a lag.

• There is some good news in this report: overall price increases have not been as high as anticipated, as decelerating inflation in housing, recreation, furnishings, and healthcare has offset some of the rise in transportation.

• But the key question is not whether the inflation will rise; it is whether inflation will peak and decline without the RBA needing to hike rates aggressively.

• A rate rise back to the post-pandemic peak of 4.35% is 70% priced in for next week and fully priced by the end of June. The doubt only relates to the timing of an increase. At least two rate rises are expected in total by the end of the year.

• But we maintain that inflation concerns are likely to evolve into growth and employment concerns over the next few months. Our view is partly based on the belief that the RBA has a higher tolerance for rising unemployment than is generally believed and will be slow to ease policy. Some prospective fiscal tightening in the Budget could slow further inflationary pressures.

• As a consequence, we continue to favour higher allocations to bonds and find 10yr yields at 5.0% attractive despite the prospect of some short-term inflation.

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