April CPI is telling us two different stories. Headline inflation fell (while still being way too high), while underlying inflation ticked higher.
For April 2026:
⛽ Headline CPI was 4.2% YoY ( ⬇️ 0.4 % )
⛽ Trimmed mean CPI was 3.4% YoY ( ⬆️ 0.1% )
⛽ Housing was up 6.3% YoY ( ⬇️ 0.2%)
⛽ Transport was up 6.6% YoY ( ⬇️ 2.3% driven by the excise cut)
⛽ Tradables inflation was 3.2% (⬇️ 1.3%)
⛽ Non-tradables inflation was 4.7% (⬆️ 0.1%)
The drop in headline inflation looks encouraging until you remember that fuel excise was halved on 1 April. That mechanically pulled transport costs lower and dragged the headline number down. Strip that out and the picture is considerably less rosy.
This morning the Treasurer flagged that the government was not planning to extend the fuel excise cut. That essentially bakes in another transport inflation jump in July. Which means we are probably looking at inflation being materially above target for at least the next two quarters, putting significant pressure on the RBA to keep tightening. (and that’s before we account for any potential impacts from the Hormuz crisis continuing to drag on).
The other key worry is the continued upward trend in non-tradeable prices, indicating that domestic inflation remains an issue. Its clear we have an ongoing domestic inflation problem without even looking at the imported problems caused by the Hormuz crisis,
For businesses, the message hasn't changed. The fuel excise cut expires on 30 June with no extension announced in the budget, and clear indications from government there won’t be an extension . When it reverts, we’re looking at an immediate 26 to 29 cent jump at the pump, right as global oil inventories continue to shrink. Plan for higher input costs, not lower ones.