Secret takeaways Headline inflation has jumped, but the spike is largely driven by unstable aspects like electricity and fuel rather than broad-based price pressures.
Hidden inflation remains more steady, although the quarterly pattern reveals it is still edging greater, which will worry the RBA.
The significant banks are lined up in expecting a rate hike in May, with some forecasting additional increases through the middle of the year.
Even modest rate increases are accumulating, with borrowers dealing with numerous dollars in extra monthly repayments if multiple walkings happen.
Many households may lose their payment buffers, suggesting borrowers need to prepare now for a duration of higher rate of interest and tighter capital.
The latest inflation figures are a timely suggestion that while the headline numbers grab attention, it’s what’s driving them beneath the surface that truly matters for rates of interest, household budget plans, and eventually residential or commercial property markets.
According to the most recent information, heading inflation leapt to an annual rate of 4.6% in March, up from 3.7%.
| ABS CPI – Month-to-month | ||
| Annual rate | Change from Feb 26 | |
| Headline | 4.6% | up from 3.7% |
| Cut | 3.3% | consistent |
However, this was mostly due to two unpredictable elements: electrical energy, which increased to a yearly rate of 25.4% on the back of completion of the refunds, and fuel prices, which rose 24.2% as an outcome of the war in the Middle East, and 32.8% between February and March.
Canstar notes that trimmed mean, which gets rid of much of the volatility, stabilised in March at 3.3% in seasonally changed terms.
| ABS CPI – Quarterly | ||
| Annual rate | Change from Q4, 25 | |
| Heading | 4.0% | up from 3.7% |
| Cut | 3.5% | up from 3.4% |
Nevertheless, looking throughout the quarter, it rose to 3.5%– the 3rd rise in 3 consecutive quarters.
Big four banks all expect May money rate trek
All four big bank financial groups are forecasting a 0.25 percentage point cash rate hike next Tuesday, according to Canstar.
CBA, NAB and ANZ expect the cash rate to remain on hold thereafter, while Westpac predicts there will be 2 more in June and August.
| Present huge 4 bank cash rate forecasts | ||
| Bank | Projection | Cash rate – end 2026 |
| CBA | 1 x 0.25 May | 4.35% |
| Westpac | 3 x 0.25 in May, June, Aug | 4.85% |
| NAB | 1 x 0.25 May | 4.35% |
| ANZ | 1 x 0.25 May | 4.35% |
Effect of a 0.25 money rate trek in May
Canstar’s information reveal that for somebody with a $600,000 home mortgage and 25 years staying at the start of the walkings, a 0.25 percentage point cash rate hike in May would increase a customer’s month-to-month repayments by $91.
Throughout what would then be 3 hikes for the year in February, March and May, the total boost would be $272.
| Effect of three 0.25 rate walkings on regular monthly payments | ||||
| Debt owing | Feb | March | May | Total |
| $600,000 | +$90 | +$91 | +$91 | +$272 |
| $800,000 | +$120 | +$121 | +$122 | +$363 |
| $1 million | +$150 | +$151 | +$152 | +$453 |
| Source: Canstar.com.au. Based on an owner-occupier paying principal & interest with 25 years staying in Feb 2026 on the RBA av. variable rate. Calculations assume banks hand down the hikes the month after. Changes are to minimum repayments. |
Some repayment buffers might vanish if the RBA walkings on Tuesday
An additional 0.25 percentage point rate trek, needs to it materialise next week, might wipe out repayment buffers homes have built over the past year, according to Canstar.
That’s due to the fact that borrowers who kept payments the exact same regardless of in 2015’s 3 0.25 portion point money rate cuts would effectively be back where they started.
This is likely to affect a large share of customers with CBA, NAB and ANZ home loans, as these banks held direct debits consistent after each cut, unless debtors actively lowered them.
Borrowers should brace for higher repayments and act now, particularly if Westpac’s money rate projection plays out, since the window to get ahead of further boosts is closing quickly.
How Australia’s inflation and cash rate compare all over the world
Australia stands apart with one of the greatest cash rates all over the world at 4.10%, following back-to-back hikes, while inflation stays fairly elevated compared to economies internationally, according to Canstar.
At the exact same time, joblessness is relatively low in Australia, highlighting a resilient labour market.
| Cash rates, inflation rates and joblessness rates around the globe | |||||
| Official money rate | Last change | Headline inflation (yearly) | Core inflation (annual) | Unemployment | |
| Australia | 4.10% | (+0.25%) 17/03/2026 | 4.60% | 3.30% | 4.30% |
| United Kingdom | 3.75% | (-0.25%) 18/12/2025 | 3.30% | 3.10% | 4.90% |
| United States | 3.50% – 3.75% | (-0.25%) 10/12/2025 | 3.30% | 2.60% | 4.30% |
| Canada | 2.25% | (-0.25%) 29/10/2025 | 2.30% | 2.20% | 6.70% |
| New Zealand | 2.25% | (-0.25%) 26/11/2025 | 3.10% | 2.70% | 5.40% |
| European Union | 2.15% | (-0.25%) 11/6/2025 | 2.60% | 2.30% | 6.20% |
| Japan | 0.75% | (+0.25%) 19/12/2025 | 1.50% | 2.40% | 2.70% |
Canstar.com.au data insights director, Sally Tindall says:
“A walking on Tuesday would efficiently neutralise all three of the rate cuts we saw in 2025, taking the cash rate back to where it was at the start of in 2015.
For those customers who didn’t adjust their payments when the cash rate was on the method down, a hike on Tuesday will spell completion of this repayment buffer.
For those paying the minimum, a 0.25 percentage point increase in May would include about $91 a month to their month-to-month payments on a $600,000 loan with 25 years remaining.
Throughout what would then be three hikes, the total increase would tally as much as $272, not as a one-off hit, but each and every single month for the foreseeable future.
Do the mathematics on a walking on Tuesday. In fact, do the maths on a further 3 cash rate hikes as per Westpac’s projection and ensure you can clear this quantity.
While this prediction is still an outlier, it’s better to be overcooked on the mortgage than underdone.”
A lesson for investors
In a climate like this, the wise relocation isn’t to respond to every headline, however to remain ahead of the pattern, tension test your finances, and make certain you’re positioned for a circumstance where rates remain greater for longer than many currently expect.
< img alt="Dorian Traill" src="https://propertyupdate.com.au/wp-content/uploads/2024/11/Dorian-Traill-148x148.jpg" height="148" width="148"/ > About Dorian Traill Dorian is a Senior Wealth Coordinator at Metropole and helps establish a customized, individualised wealth strategy specifically for the client’s circumstances. Dorian’s career in residential or commercial property and finance began in 1997 as a sales agent in Brisbane before he switched to home mortgage broking. He has actually been recommending clients on how to effectively grow their wealth through property for a variety of years.