Australia’s inflation outlook is showing steady signs of improvement, with the Consumer Price Index (CPI) rising 3.7% in the 12 months to February 2026, easing from 3.8% in January. The data points to a gradual cooling trend, suggesting inflation is moving in the right direction, albeit at a measured pace.
Stability Emerging in Price Trends
Every month, CPI remained flat in original terms and increased 0.2% on a seasonally adjusted basis, indicating stable short-term price movements. Underlying inflation also held steady, with the trimmed mean at 3.3% and weighted median at 3.5%, reflecting a more controlled inflation environment. This consistency suggests inflationary pressures are no longer accelerating and are beginning to stabilise across the economy.
Key Drivers Remain but Pressures Are Broad-Based
Housing continues to lead price growth, rising 7.2% annually, supported by rents and dwelling costs. At the same time, food and non-alcoholic beverages (+3.1%) and recreation and culture (+4.1%) highlight ongoing demand across both essential and discretionary categories. Other sectors such as education (+4.8%) and clothing (+5.0%) also recorded increases, pointing to broad-based inflation. However, some relief emerged from transport (-0.2%), driven by lower fuel prices.
Goods Easing, Services Holding Firm
A notable trend is the moderation in goods inflation, which eased to 3.5%, reflecting improving supply conditions and softer fuel prices. Meanwhile, services inflation remained steady at 3.9%, supported by areas such as travel and housing-related costs. This indicates that while global pressures are easing, domestic demand continues to support price levels.
Domestic Factors Still in Focus
Non-tradables inflation rose 5.0%, significantly higher than tradables at 1.3%, reinforcing the role of domestic drivers like housing, energy, and services. This shift suggests inflation is becoming more locally driven rather than influenced by global volatility.
A Gradual Path Toward Stability
Overall, the February CPI data signals that inflation is progressively easing while remaining stable, with improving trends in goods offsetting persistent strength in services. While some pressures remain, particularly in housing and energy, the broader trajectory suggests Australia is moving toward a more balanced and controlled inflation environment, supporting expectations of a gradual return to price stability.
Note- All data presented is based on information available at the time of writing.
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The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
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Is Australias Inflation Truly Cooling or Just Stabilising? A Deeper Look at February 2026 CPI
Highlights:
Australia’s inflation outlook is showing steady signs of improvement, with the Consumer Price Index (CPI) rising 3.7% in the 12 months to February 2026, easing from 3.8% in January. The data points to a gradual cooling trend, suggesting inflation is moving in the right direction, albeit at a measured pace.
Stability Emerging in Price Trends
Every month, CPI remained flat in original terms and increased 0.2% on a seasonally adjusted basis, indicating stable short-term price movements. Underlying inflation also held steady, with the trimmed mean at 3.3% and weighted median at 3.5%, reflecting a more controlled inflation environment. This consistency suggests inflationary pressures are no longer accelerating and are beginning to stabilise across the economy.
Key Drivers Remain but Pressures Are Broad-Based
Housing continues to lead price growth, rising 7.2% annually, supported by rents and dwelling costs. At the same time, food and non-alcoholic beverages (+3.1%) and recreation and culture (+4.1%) highlight ongoing demand across both essential and discretionary categories. Other sectors such as education (+4.8%) and clothing (+5.0%) also recorded increases, pointing to broad-based inflation. However, some relief emerged from transport (-0.2%), driven by lower fuel prices.
Goods Easing, Services Holding Firm
A notable trend is the moderation in goods inflation, which eased to 3.5%, reflecting improving supply conditions and softer fuel prices. Meanwhile, services inflation remained steady at 3.9%, supported by areas such as travel and housing-related costs. This indicates that while global pressures are easing, domestic demand continues to support price levels.
Domestic Factors Still in Focus
Non-tradables inflation rose 5.0%, significantly higher than tradables at 1.3%, reinforcing the role of domestic drivers like housing, energy, and services. This shift suggests inflation is becoming more locally driven rather than influenced by global volatility.
A Gradual Path Toward Stability
Overall, the February CPI data signals that inflation is progressively easing while remaining stable, with improving trends in goods offsetting persistent strength in services. While some pressures remain, particularly in housing and energy, the broader trajectory suggests Australia is moving toward a more balanced and controlled inflation environment, supporting expectations of a gradual return to price stability.
Note- All data presented is based on information available at the time of writing.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au