Key Takeaways

• Sharp acceleration: Australian CPI surged to 4.6% in March, up dramatically from 3.7% in the prior quarter, though slightly below the 4.8% forecast.
• Monthly record: CPI jumped 1.1% month-on-month — the largest monthly increase since the series began in 2017, driven primarily by soaring transportation costs.
• Fuel the main culprit: The spike directly reflects global oil price disruptions stemming from the U.S.-Israel war on Iran.
• Core holds steady: Trimmed mean CPI was unchanged at 3.3%, still well above the RBA’s 2-3% target band.
• Quarterly picture: Annual CPI climbed 4.1% year-on-year, while annual trimmed mean CPI rose 3.5%.
• Housing adds pressure: Higher housing prices were another notable contributor to the March inflation surge.
• RBA tightening tested: The data arrives after the Reserve Bank of Australia hiked rates twice this year, with underlying inflation showing tentative signs of stabilization.

Australian consumer price index inflation accelerated sharply in March amid fuel and shipping disruptions stemming from the war in the Middle East, although the headline figure landed slightly below expectations as core inflation held steady.

CPI climbed 4.6% in the period ending March 31, according to data released by the Australian Bureau of Statistics (ABS) on Wednesday. The reading came in just below the 4.8% forecast, but rose sharply from the 3.7% logged in the previous quarter.

CPI advanced 1.1% in March compared with the prior month, with transportation costs — driven by higher fuel prices — emerging as the single biggest contributor. The acceleration tracks a steep climb in global oil prices triggered by disruptions tied to the U.S.-Israel war on Iran.

Core Inflation Remains Sticky

Core inflation, as measured by the trimmed mean CPI, rose 3.3% in March — unchanged from the previous month but still firmly above the Reserve Bank of Australia’s 2% to 3% annual target band.

“The increase in March is the largest monthly increase since the series began in 2017, reflecting the impact of the conflict in the Middle East on fuel prices,” Sue-Ellen Luke, ABS head of prices statistics, said in a statement.

Higher housing prices also contributed meaningfully to the March inflation pickup.

On a quarterly basis, CPI rose 4.1% year-on-year, while trimmed mean CPI climbed 3.5%.

Wednesday’s data underscored the toll the Iran war has taken on fuel prices and inflation more broadly. At the same time, the figures pointed to some signs of stabilization in underlying inflation — particularly after the Reserve Bank of Australia delivered two interest rate hikes earlier this year.