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Australia CPI Preview: Inflation Data Could Set the Tone for AUD Trading

 Australia CPI Preview: Inflation Data Could Set the Tone for AUD Trading


August 25, 2026


Australian inflation data is due early in Wednesday's Asian session, making the Australia CPI release one of the key events for AUD traders.


The monthly CPI is expected to rise by around 0.9%, according to the market expectation cited by traders. Westpac's latest preview is slightly lower at 0.84% month-on-month, with annual inflation expected to ease to around 3.3%.


Why the CPI Report Matters


Australia's inflation remains above the Reserve Bank of Australia's 2–3% target band. The latest official data showed annual CPI inflation at 3.8% in June, while trimmed-mean inflation remained at 3.6%.


The RBA kept its cash rate at 4.35% at its August meeting, but policymakers remain concerned about upside inflation risks. Recent RBA commentary indicates that further rate increases remain possible if inflation pressures fail to ease.


Goods Prices in Focus


One of the important questions for this release is whether goods prices begin to rebound after recent easing.


Fuel prices have been an important source of disinflation, while services inflation has remained more persistent. A stronger-than-expected rise in goods prices could suggest that inflationary pressure is becoming broader rather than being driven only by temporary factors.


What It Could Mean for AUD


Hotter-than-expected CPI:

A stronger inflation reading could increase expectations for additional RBA tightening and potentially support the Australian dollar (AUD).


In-line CPI:

A result close to expectations could leave traders focused on the underlying inflation details and the RBA's next policy decision.


Softer CPI:

A weaker reading could reduce expectations for further rate hikes and potentially put pressure on the AUD.


Key Numbers to Watch


- Australia CPI: Due August 26, 2026

- Monthly forecast: Around 0.9%

- Westpac forecast: 0.84% m/m

- Latest annual CPI: 3.8%

- RBA target: 2–3%

- RBA cash rate: 4.35%


Forex Market Outlook


The CPI release could trigger increased volatility in AUD/USD, AUD/JPY and other Australian-dollar pairs. Traders will be watching not only the headline figure but also the composition of inflation, particularly goods, services and underlying price pressures.


The key question: Will goods prices rebound enough to keep Australia's inflation problem alive?


Disclaimer: This article is for informational purposes only and is not financial or investment advice. Forex trading involves substantial risk.

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