Australia's CPI at 4.3%: do you watch the headline or the trimmed mean?

FTC Community TeamStaff1 Nov 20264 views

Australia's consumer price index rose 4.3% in the year to September 2026 (news). The Reserve Bank looks at underlying measures such as the trimmed mean as well as the headline rate, because the headline can jump with petrol and other volatile prices. The RBA's next decision is due on 3 November (preview). For how inflation reaches currency pairs, see how inflation moves currencies.

Australia's CPI at 4.3%: do you watch the headline or the trimmed mean? — central bank rate path diagram — A central bank's policy rate path across recent meetings

Questions for members:

Do you trade the headline rate or the underlying measure? Why?
How do you handle a release where energy prices and core inflation move in different directions?
Which Australian number matters most to the Australian dollar for your own trading?

Australia's CPI at 4.3%: do you watch the headline or the trimmed mean? — risk-reward diagram — A risk-reward ratio of 1 to 2

Background: How inflation moves currency pairs: the CPI transmission

Inflation is the input central banks watch most closely, which makes CPI the release that moves currencies most. Here is the transmission chain — from print to policy to price — and why the details beat the headline.

How does inflation affect currency prices?

Through central bank policy: higher inflation raises the odds of tighter policy, which attracts money and strengthens the currency. The chain runs from the print to the policy read to yields to the pair.

Why does the market react to the core CPI number?

Core CPI strips out food and energy, giving the cleanest read on underlying inflation. Central banks treat energy shocks as transitory, so the market's policy read focuses on the core measure.

Read the full guide

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