New figures from the ABS show that headline and underlying inflation are now both in the bottom half of the Reserve Bank of Australia's target band for the first time since August 2021.
In the face of heightened global economic uncertainty, it's very pleasing to see the progress we've made on inflation is substantial and now sustained.
Both headline and underlying inflation fell by more than expected in today's data.
Headline inflation was 2.1 per cent through the year to May 2025, down from 2.4 per cent in April.
Headline inflation is almost half of what it was in May last year and is at its lowest level since March 2021.
Annual trimmed mean inflation was 2.4 per cent through the year to May 2025, down from 2.8 per cent in April.
Underlying inflation is at its lowest level since November 2021 and has returned to the middle of the RBA's target band.
Underlying inflation has been in the RBA's band for six consecutive months. This is the first time this has happened since the monthly inflation series began in 2018.
It was also encouraging to see services inflation moderate substantially to 3.3 per cent through the year to May 2025, down from 4.1 per cent in April.
We know these monthly numbers are volatile, but today's data shows we've made substantial and sustained progress on inflation.
This progress means Australia is better placed and better prepared than other countries for heightened economic uncertainty and volatility around the world.
The Australian economy is not immune from instability in the Middle East, including from the recent volatility in global oil prices.
That's why the progress we have made together in the economy is so important. No major advanced economy has achieved what we have with unemployment in the low 4s, inflation below 2.5 per cent and the economy continuing to grow.
Electricity prices fell 5.9 per cent in the year to May but would have increased 2.0 per cent without the energy rebates for every household we are rolling out with the states.
Rents rose 4.5 per cent in the year but would have increased 5.7 per cent without the recent increases to Commonwealth Rent Assistance.
Under Labor, inflation is down substantially, real wages are up, unemployment is low, our economy is growing, debt is down and interest rates are falling.
Even with this substantial progress and two interest rate cuts in three months, we know people are still under pressure and we face global economic headwinds.
That's why the Albanese Labor Government is delivering more real, practical and ongoing help with the cost of living for Australians, with more support set to roll out from Tuesday next week.
