January CPI Shows Sustained Pressures

• Australia’s January CPI printed 3.8% y/y, matching the prior month and slightly firmer than the 3.7% expected, keeping inflation outside the RBA’s target range.
• The trimmed mean rose to 3.4% y/y from 3.3%, indicating underlying price pressure remains persistent rather than contained.
• Within the basket, goods prices strengthened to 3.8% (from 3.4%), led by a sharp lift in electricity costs to 32.2% (from 21.5%) following the expiry of rebates, while housing inflation accelerated to 6.8% (from 5.5%), leaving price increases broadly spread across components.
• Taken together, the release reinforces the view that inflation remains inconsistent with a sustained return to target without further policy restraint.
• Interest rate pricing edged firmer, with around 23bps by May and close to 40bps of tightening by end-2026.