Australia: Energy costs keep CPI elevated – UOB

UOB economist Lee Sue Ann highlights that Australian inflation remains elevated, with housing and electricity key drivers, even as trimmed mean CPI tracks slightly below earlier RBA projections. The report stresses that the relatively new monthly CPI series needs more time to become the main benchmark, while energy-related rebates and their expiry are distorting electricity price dynamics and measured inflation.

Housing and electricity drive price pressures

"Headline CPI was flat month-on-month in Feb, with annual inflation falling back to 3.7%, weaker than consensus forecast of 3.8%."

"Jan and Feb data prints point to underlying inflation tracking slightly below the RBA’s Statement of Monetary Policy – Feb 2026."

"Annual housing inflation had risen from the 6.8% y/y reading in Jan, reflecting rising costs for Electricity, New dwellings and Rents."

"Excluding the impact of both the Commonwealth and State Government electricity rebates over the previous year, electricity prices rose 4.9% in the 12 months to Feb."

"Inflation remained elevated in Feb, even before the US/Israel-Iran war disrupted Middle Eastern energy supplies and pushed petrol prices higher, underscoring ongoing price pressures in the economy."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)