Australia Producer Price Inflation Moderates as Cost Pressures Persist
Australia’s producer price inflation slowed in the final quarter of 2025, with the Producer Price Index (PPI) rising 0.8 per cent for the December quarter and 3.5 per cent over the past year, according to the latest figures released today by the Australian Bureau of Statistics (ABS).
The PPI measures the change in prices of goods and services as they leave or enter the production process — a key indicator of inflationary pressures ahead of broader consumer prices.
The quarterly rise of 0.8 per cent was below market expectations, which had forecast around a 1.1 per cent increase, suggesting that cost pressures on producers may be cooling in some sectors.
On an annual basis, producer prices climbed 3.5 per cent, a rate that is broadly stable compared with recent quarters and reflects ongoing, albeit moderate, price growth across the economy.
Property and residential rents were among the main drivers of price rises in recent quarters, with property operators showing strong contributions to final demand indexes.
Construction input and output prices (such as building materials and labour-intensive services) have been growing, reflecting demand in the housing and infrastructure sectors.
ABS economists say the quarterly increase was driven largely by stronger demand in services and construction industries, where persistent demand for housing and related services continued to push up prices received by producers. Property operators — including those in the rental and accommodation sectors — were notable contributors to the quarterly gain.
The ABS release comes as inflation remains a central focus for policymakers, with recent data showing underlying price growth — such as the Reserve Bank’s trimmed mean Consumer Price Index — tracking above levels seen a year ago.
Analysts say producer prices often foreshadow consumer inflation trends, with higher input and output costs for businesses eventually filtering through to households. The latest PPI figures, combined with recent consumer price data, will be closely watched ahead of the Reserve Bank of Australia’s next monetary policy decision.
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