Australia’s annual inflation rate held at 3.8% in January 2026, unchanged from December but slightly above market expectations of 3.7%. The figure remained above the Reserve Bank’s 2–3% target range.
Services inflation eased to 3.9%, down from a two-year high of 4.1%, while goods inflation accelerated to 3.8% from 3.4%. The pickup in goods prices was driven largely by a steep jump in electricity costs (32.2% vs 21.5%) following the expiry of state rebates.
Price pressures remained broad-based. Annual increases continued across food and non-alcoholic beverages (3.1% vs 3.4%), alcohol and tobacco (5.0% vs 4.9%), clothing (5.3% vs 3.4%), furnishings (1.4% vs 2.0%), health (3.2% vs 3.6%), transport (1.1% vs 1.6%), communication (1.4% vs 1.1%), recreation (3.6% vs 4.4%), education (5.4% vs 5.4%), and financial services (2.4% vs 2.5%).
The trimmed mean CPI, a key underlying inflation measure, edged up to 3.4% year-on-year, surpassing both December’s reading and the consensus forecast of 3.3%. On a monthly basis, the headline CPI rose 0.4%, slowing from a 1.0% increase in December.
