Australia's underlying inflation has climbed to its highest level since 2024, according to the latest figures. The trimmed mean measure rose to 3.6 percent in the 12 months to May, up from 3.4 percent in April. The increase points to persistent price pressures in the economy even as some other readings have been more subdued.
The trimmed mean, or underlying, measure is the one the Reserve Bank of Australia watches most closely. It is the RBA's preferred gauge of the pricing pressure facing households, and it plays a central role when the central bank weighs decisions on interest rates. A rise in this measure therefore carries particular weight for the path of monetary policy.
The headline inflation number, by contrast, is seen as more volatile and harder to read. According to the coverage, the Reserve Bank is expected to look through that headline figure because it can swing sharply from month to month, and to concentrate instead on the steadier underlying measure that has now moved higher.
The central bank has also offered a cautious outlook. The RBA has warned that inflation will trend higher in the coming months, pointing to ongoing global instability as a factor that could keep pushing prices up. That warning suggests the bank sees the risks to inflation tilted to the upside for now.
Against that backdrop, analysts cited in the coverage expect at least one more interest rate rise. The next move is seen as likely to come in August. If a rise materialises then, it would take the current cash rate from 4.35 percent to 4.6 percent, adding to the cost of borrowing for households and businesses.
For now, the rise in the trimmed mean measure keeps the focus firmly on the Reserve Bank and its next steps. With underlying inflation at its highest since 2024 and the RBA flagging further upward pressure, attention is turning to whether the central bank will follow through with another increase in the months ahead.