How Australian inflation has changed over time
From the early 1990s through to 2020, Australia enjoyed a prolonged period of low and stable inflation averaging around 2.5% per year — broadly in line with the RBA target. The COVID-19 pandemic disrupted global supply chains and unleashed significant fiscal and monetary stimulus, contributing to a sharp inflationary surge that peaked at 7.8% in December 2022. Since then, inflation has eased back toward the target band, reaching approximately 3.2% trimmed mean by early 2025 — a meaningful improvement, though the cost-of-living impact from that spike has been permanent.
| Period | Avg. CPI | Key driver |
|---|---|---|
| 1980s | 8.4% | Oil shocks, wages growth |
| 1990s | 3.2% | Recession, inflation targeting adopted |
| 2000s | 3.0% | GST (2001 spike), mining boom |
| 2010s | 2.2% | Globalisation, weak wages growth |
| 2020–22 | 4.1% | COVID supply disruptions, stimulus |
| 2023 | 5.4% | Post-COVID energy, services |
| 2024 | 3.8% | Easing, housing/insurance sticky |
What CPI measures
The Consumer Price Index (CPI) is compiled by the Australian Bureau of Statistics (ABS) and released quarterly. It measures the price change of a fixed basket of goods and services representative of typical household spending. The ABS also publishes two analytical series: the trimmed mean (excludes the most extreme 15% of price changes each quarter) and the weighted median — both are regarded by the RBA as better measures of underlying inflation than the volatile headline figure.
How inflation affects your savings and super
The real return on any investment is the nominal return minus the inflation rate. A savings account earning 4.5% p.a. when inflation is 3.5% delivers only 1% real growth in purchasing power. This is why leaving large sums in cash for extended periods — especially in high-inflation environments — erodes wealth in real terms. Superannuation invested in a growth option targeting 7–9% p.a. nominal aims to deliver 4–6% real returns over the long run, which is why staying invested in growth assets over a long horizon is typically recommended for super balances.