CPI hit 4.6%. But the trimmed mean held at 3.3%
Australia’s headline inflation jumped to 4.6% in the year to March 2026, the highest level since September 2023. The Australian Bureau of Statistics released the data this morning, showing inflation accelerated sharply from February’s 3.7% reading. On a quarterly basis, annual CPI accelerated to 4.1% in Q1 from 3.6%.
But the bigger story is the trimmed mean. The monthly trimmed mean, the RBA’s preferred measure of underlying inflation, held steady at 3.3%. The quarterly trimmed mean, which the RBA Board uses for policy decisions, rose modestly to 3.5% from 3.4%, slightly below economists’ forecasts of 3.6%.
Going into today, ASX 30-day cash rate futures were pricing an 85% chance of a hike to 4.35%, and all four big banks were forecasting it. After the data, which has been trimmed to around 76%, still favours a hike, but it’s no longer a near-certainty. Here is what investors need to know.
What are the Best ASX Stocks to invest in right now?
Why The Headline 4.6% Number Is Less Important Than It Looks
The 4.6% is shocking, but the source matters. Almost the entire jump came from petrol prices. Transport costs jumped 8.9% over the year, with automotive fuel rising 32.8% in March alone, driven by the Middle East conflict pushing oil prices higher.
Housing remains the largest annual contributor at 6.5% but moderated from 7.2% in February. Services inflation eased to 3.6% from 3.9%. The trimmed mean exists precisely to filter out volatile items like fuel.
Why A May 5 Hike Remains The More Likely Outcome
The case for a hike is still the more probable scenario. Trimmed mean inflation at 3.3-3.5% is still above the RBA’s 2-3% target band. The March RBA decision passed 5-4 in favour of a hike, meaning the Board members who want higher rates have the numbers on their side. Stephen Smith from Deloitte said today’s data “points to a rate hike from the RBA next week.” ANZ also still expects a May hike.
There is also a complication for those expecting a hold. Treasurer Jim Chalmers warned today that the oil shock will likely feed into “trimmed mean data as well” in the coming months. That argues for the RBA to hike now rather than wait.
What This Means For ASX Stocks
If the RBA hikes to 4.35% (the more likely outcome), banks benefit through margin expansion. Commonwealth Bank (ASX:CBA), National Australia Bank (ASX:NAB), Westpac (ASX:WBC) and ANZ (ASX:ANZ) all gain. Macquarie Group (ASX:MQG) is our preferred play given its trading exposure on top of the margin lift.
If the RBA surprises with a hold, property trusts rally. Mirvac (ASX:MGR), Stockland (ASX:SGP), GPT Group (ASX:GPT) and Lendlease (ASX:LLC) all benefit. Goodman Group (ASX:GMG) remains our preferred property trust given its data centre tilt.
Gold names like Northern Star (ASX:NST) and Newmont (ASX:NEM) keep their bid in either scenario as inflation protection.
The Investor’s Takeaway
In our view, today’s data has shifted the May 5 call from a near-certain hike to roughly 3-to-1 odds in favour of a hike. That is still a hike-leaning outcome, not a coin flip. For positioning, lean towards the hike scenario. Keep meaningful exposure to the big four banks and Macquarie. Build modest property trust positions as insurance against a surprise hold. Hold gold across both. If bank shares rally hard, traders are confirming the hike. If property trusts rally, traders are pricing in a surprise hold.
