Inflation steady at 3.8 per cent as housing and electricity drive price pressures
Australia’s annual inflation rate remained steady at 3.8 per cent in the year to January 2026, according to new data released by the Australian Bureau of Statistics (ABS).
The latest Consumer Price Index (CPI) figures show prices rose 0.4 per cent in January, keeping the annual rate unchanged from December. ABS head of prices statistics Michelle Marquardt said housing costs were the largest contributor to inflation, rising 6.8 per cent over the year.
Electricity prices were a major driver, increasing 32.2 per cent annually. The ABS said this sharp rise was largely due to households exhausting Commonwealth and state energy rebates, alongside annual price adjustments by energy retailers. Excluding the impact of government rebates, electricity prices rose 4.5 per cent over the year.
Food and non-alcoholic beverages rose 3.1 per cent over the 12 months to January, down slightly from December. Higher prices for meals out and takeaway were a key factor, reflecting increases in wages and ingredient costs.
Recreation and culture prices increased 3.7 per cent annually, with domestic holiday travel and accommodation up 5.6 per cent, although this marked a slowdown compared to the previous month.
Underlying inflation, measured by the trimmed mean, rose 3.4 per cent in the year to January, up marginally from 3.3 per cent in December. This measure excludes volatile price changes to provide a clearer indication of broader inflation trends.
The CPI is a key indicator of inflation and is closely monitored by policymakers, including the Reserve Bank of Australia, when setting interest rates.
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