Inflation actually fell in Australia last month, thanks to temporary government fuel discounts that saw fuel prices come down by 7% from their record peaks in March.

New Australian Bureau of Statistics figures show the monthly consumer price index (CPI) rose 4.2% in the 12 months to April 2026 – down from 4.6% in March and lower than market expectations.

However, the underlying picture was less reassuring.

The closely watched “trimmed mean” measure rose to 3.4%, up from 3.3% a month earlier. (The trimmed mean is the average rate of inflation after “trimming” away the items with the largest price rises or falls, leaving the weighted average of the middle 70% of items.)

Australia’s latest inflation figures will give the Reserve Bank a reason to hold rates steady at its June 15-16 meeting, but not a reason to relax about inflation.

With fuel prices still much higher than before the Middle East war began, the risks of further spikes in inflation and more rate rises this year have not gone away.

How fuel discounts helped cool inflation

When oil prices surged following the war in Iran, which began on February 28, the immediate effect was obvious: petrol became more expensive, soaring nearly 33% higher in March.

The new ABS data showed fuel prices actually fell 7% in April. On April 1, the federal government dropped its fuel excise by around 32 cents per litre from April 1, as well as cutting road user charges for heavy vehicles.

Both of those discounts are set to end on........

© The Conversation