Australia’s annual inflation rate has edged down to 2.4% in February 2025, according to the Australian Bureau of Statistics (ABS), marking the lowest reading since October and reinforcing the trend of easing price pressures across the economy.
The monthly Consumer Price Index (CPI) indicator slowed from 2.5% in January, with ABS head of prices statistics Michelle Marquardt noting, “Annual CPI inflation was slightly lower in February, after holding steady at 2.5 per cent for the previous two months.”
Core inflation measures also moderated. The trimmed mean, the Reserve Bank’s preferred gauge of underlying inflation, fell to 2.7%, from 2.8% in January. The CPI excluding volatile items and holiday travel also dropped to 2.7%, down from 2.9%.
The main contributors to annual inflation were:
- Food and non-alcoholic beverages: up 3.1%
- Alcohol and tobacco: up 6.7%
- Housing: up 1.8%
Inflation in the housing category slowed, partly due to a 13.2% annual fall in electricity prices, driven by the timing of Energy Bill Relief Fund rebate payments in Victoria. Without government rebates, electricity prices would have declined by just 1.2%.
Rent inflation eased to 5.5%, the lowest annual growth since March 2023, in line with rising vacancy rates. Prices for new dwellings rose only 1.6%, the weakest annual rise since May 2021, as builders offered promotions to attract customers.
Other notable movements:
- Automotive fuel prices fell 5.5% over the year, despite a 1.2% rise in February.
- Insurance prices rose 7.6%, down from 16.5% a year earlier.
- Education costs rose 5.6%, led by increases in school fees and tertiary course indexation.
- Holiday travel and accommodation fell 7.6% in February, after a 5.9% drop in January.
The data comes less than a week before the Reserve Bank of Australia’s next interest rate decision on 1 April. With inflation now within the RBA’s 2–3% target band and both headline and core measures easing slightly, economists and financial markets widely expect the cash rate to remain unchanged at 4.10%. The ABS also noted that the RBA places greater weight on quarterly inflation data, which is due in late April.
