The Key Numbers to Watch on April 29
Headline CPI: currently 3.7% annual (Feb 2026) — target is 2–3% | Trimmed mean: 3.3% annual — this is the RBA's preferred measure
Release: 29 April, 11:30am AEST (ABS) | Next RBA meeting: 4–5 May | Market probability of May hike: 62% (as at 19 April 2026)
On 29 April at 11:30am AEST, the Australian Bureau of Statistics will publish the March quarter Consumer Price Index — the most important economic data release of 2026 for Australian borrowers. The number lands just six days before the RBA Board meets on 4–5 May, with the decision announced on May 5, and it will almost certainly determine whether the cash rate rises from 4.10% to 4.35%, or whether the Board pauses for the first time in the current hiking cycle. Inflation is currently running at 3.7% annually — well above the RBA's 2–3% target band — and consumer inflation expectations hit 6.9% in mid-March. To understand what April 29 will tell us, it helps to understand exactly what the RBA is measuring, why some components matter more than others, and what the numbers actually need to show.
How Australia Measures Inflation
The ABS publishes two key inflation measures each quarter, and the RBA treats them very differently:
Headline CPI vs Trimmed Mean — What's the Difference?
| Measure | What It Includes | Feb 2026 Reading | RBA Weight |
|---|---|---|---|
| Headline CPI | All goods and services including volatile items (fuel, fruit, electricity) | 3.7% annual | Secondary — subject to short-term swings |
| Trimmed Mean | Middle 70% of price changes — strips out the biggest movers in either direction | 3.3% annual | Primary — the RBA's preferred underlying measure |
The RBA's 2–3% inflation target is measured against the trimmed mean, not the headline figure. A big drop in petrol prices can pull headline CPI down sharply without changing the underlying inflation picture at all.
This distinction matters enormously for interpreting the April 29 release. If the headline number falls sharply but the trimmed mean stays elevated, the RBA will look through it. What borrowers need to watch is the trimmed mean.
Where Inflation Is Coming From
Not all price rises are equal in the RBA's view. The Board distinguishes between goods inflation (which tends to be volatile and driven by supply chains) and services inflation (which is stickier and more directly tied to domestic demand and wages).
The Stickiest Categories
The components most resistant to rate rises — and therefore most watched by the RBA — are:
- Rents and housing costs: Rental vacancy rates are at 1.6% nationally, well below the long-run average of 2.5%. Rents rose 5.7% annually as of the March quarter. Rate hikes do not reduce rent inflation — if anything, they worsen it by reducing new housing supply.
- Services inflation: Hairdressing, healthcare, restaurant meals, insurance. These are driven by wages and domestic demand — the exact channel rate hikes are meant to cool. Services inflation has remained persistently above goods inflation throughout the current cycle.
- Insurance: Insurance premiums have surged due to increased claims costs and reinsurance costs. This feeds directly into CPI and is largely outside the RBA's control.
The concern for the RBA is that goods inflation — driven by global supply chains — has largely resolved, but services inflation has not. If the Q1 CPI confirms that services prices are still rising faster than the 2–3% target, the case for pausing in May weakens considerably.
What the Numbers Need to Show
For a May pause to be credible, the March quarter data needs to show a meaningful step down from the February monthly figure of 3.3%. Note: the February figure is a monthly estimate based on a partial basket; the April 29 quarterly figure covers the full basket and may differ. Here's how to read the numbers when they land:
Reading the April 29 Result
| Trimmed Mean Result | Likely RBA Response | What It Means for Borrowers |
|---|---|---|
| Above 3.3% (above the Feb 2026 monthly trimmed mean) | Hike near-certain | Cash rate rises to 4.35% on May 5. Lenders pass on within days. |
| Around 3.0–3.3% | Hike likely — modest improvement insufficient | Still above target. Most banks hold their May hike call. Rate rises to 4.35%. |
| Below 3.0% | Pause becomes credible | CBA and possibly others revise to a hold. Markets reprice. Fixed rate pressure eases slightly. |
| Below 2.5% | Hold almost certain | Unlikely given current trajectory, but would mark a significant turning point. Pause in May and possible pause in June. |
The trimmed mean has not been below 3.0% since mid-2023. A reading below 3.0% on April 29 would be a genuine surprise. The base case across markets and major banks is that it stays above 3.0% and a May hike proceeds.
Why Consumer Inflation Expectations Also Matter
The ABS CPI is not the only inflation signal the RBA watches. Consumer inflation expectations — surveyed by ANZ and Roy Morgan — jumped to 6.9% in mid-March 2026, up 1.6 percentage points from February. This matters because the RBA is acutely aware that if households expect prices to keep rising, they will demand higher wages, and higher wages feed back into services inflation. Breaking that cycle is part of why the RBA has been willing to hike aggressively even with a split Board.
High consumer expectations do not directly feed into the CPI number, but they inform the Board's view of where inflation is heading, not just where it has been. Even a softer-than-expected Q1 CPI result may not be enough for a pause if the RBA believes expectations remain unanchored.
The Quarterly Number Is What Matters Most
Since October 2025, the ABS has been publishing a complete Monthly CPI as Australia's primary measure of headline inflation. These monthly releases give borrowers a timely read on inflation trends. However, the RBA has confirmed it will continue to focus on the quarterly trimmed mean — compiled on a consistent historical basis — while the seasonal properties of the new monthly series become established. The quarterly figure published on April 29 is therefore still the number the RBA's models are calibrated to. If the monthly data through February has been suggesting improvement but the quarterly figure comes in differently, the quarterly reading takes precedence.
The Honest Outlook
Inflation has been persistently above the RBA's 2–3% target for most of the past three years. The trimmed mean has barely moved: it was above 3% throughout 2025 and sits at 3.3% heading into Q1 2026. For that number to fall below 3.0% in a single quarter would require a broad and simultaneous easing across services, rents, and goods — the kind of rapid disinflation that has not been seen in Australia since the early 2000s.
The more likely scenario is a gradual drift down — perhaps to 3.0–3.1% — which keeps the RBA on track to hike in May and again in subsequent meetings. The question for borrowers is not whether rates will peak at 4.35%, but when they will start coming down. And that answer depends on several more quarters of data, not just April 29.
What Happens After May 5
Whether the RBA hikes or pauses on May 5, the broader rate outlook remains elevated. ANZ revised its 2026 property price forecast down to 2.8% (from 4.8%) in April 2026, citing higher-for-longer rates as the central constraint on the market. Westpac's April 2026 forecast has the cash rate peaking at 4.85% by August 2026 — an outlier among the big four, driven by the Middle East fuel shock and its flow-through into broader prices. Even a pause in May would simply delay — not prevent — the next hike if inflation stays above target.
The practical implication: borrowers on variable rates should model their repayments at 4.35% and 4.60% now, not just the current 4.10%. If either of those scenarios creates financial stress, the time to act is before May 5, not after. See our rate decision preview for a full breakdown of what to do before the decision.
Written by Amit Narang, Mortgage Broker | Credit Representative 558902 of Outsource Financial Pty Ltd (ACL 384324)
Sources: ABS, "Consumer Price Index, Australia, February 2026"; RBA, "Measures of Consumer Price Inflation"; Roy Morgan, "ANZ-Roy Morgan Inflation Expectations, March 2026"; RBA, "Monetary Policy Decision, March 2026"; ANZ Research, "Housing and Rate Outlook," April 2026.
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