May Sees Inflation Ease More Than Expected, Trimmed Mean Hits Lowest Since 2021

Inflation eased further last month, with consumer prices rising 2.1 per cent over the year to May, down from 2.4 per cent the previous month. According to the Australian Bureau of Statistics, the monthly Consumer Price Index (CPI) was at its lowest level since October 2024. The annual trimmed mean, a measure of underlying inflation, was down to 2.4 per cent in May, from 2.8 per cent in April, which the ABS said was its lowest rate since November 2021. Ahead of the data release, market pricing put the chance of an interest rate cut in July around 81 per cent, according to LSEG. The Reserve Bank next meets to consider interest rates in just under a fortnight's time.

Grocery price rises ease off. While food and non-alcoholic beverages were the biggest contributor to the headline CPI, they rose 2.9 per cent over the year — down from 3.1 per cent in April. Fruit and vegetables rose 2.8 per cent in the year to May, down significantly from the 6.1 per cent increase recorded a month earlier. Looking at fruit in isolation, prices actually fell last month, down 2.7 per cent, with lower prices for mandarins, oranges, avocados and apples. Meanwhile, electricity rebates continued to impact energy costs, with electricity prices down 5.9 per cent over the 12 months to May — that was a smaller fall than the 6.5 per cent in April. \"In Victoria, the impact of these rebates was lower in May than April due to the timing of payments,\" ABS head of prices statistics Michelle Marquardt noted. \"Without the Commonwealth and state government rebates, electricity prices would have risen 2 per cent in the 12 months to May.\"