Statement on Monetary Policy – November 2025Box C: The Transition to a Complete Monthly CPI

The ABS will start publishing a complete monthly CPI in late November, with the first release of data for October 2025. The ABS collects prices for thousands of goods and services consumed by households and, in April 2024, began collecting data for many of these prices on a monthly basis. The introduction of the complete monthly CPI is a significant milestone, which brings Australia in line with international best practice. Over time, it will support the RBA in making well-informed and timely monetary policy decisions.

To help provide continuity while the properties of the monthly data become clear, the ABS will continue to publish some data from the seasonally adjusted quarterly CPI series (based on the pre-October 2025 collection frequency) for at least 18 months. The RBA will continue to monitor the quarterly data alongside the monthly series throughout this period. With the complete monthly CPI about to commence, the ABS has discontinued the monthly CPI Indicator.

Headline inflation from the complete monthly CPI will be the new target for monetary policy.

Headline consumer price inflation measures the change in the price of the entire ‘basket’ of goods and services purchased by households, as captured in the CPI. The RBA’s flexible inflation target is for headline consumer price inflation to be between 2 and 3 per cent, and monetary policy is set in a forward-looking way so that inflation is expected to return to the midpoint of this range.

In recent history, the RBA’s target has been specified as year-ended headline inflation from the quarterly CPI.

The monthly CPI will replace the quarterly CPI as Australia’s primary measure of year-ended headline inflation and the benchmark for the RBA’s inflation target. While it may be volatile on a month-to-month basis, it will also provide more timely and complete information on consumer price inflation.

The RBA currently uses the quarterly trimmed mean measure to assess underlying price pressures in the economy.

The RBA monitors measures of underlying inflation to help look through volatility in prices, including one-off or temporary price changes that do not reflect underlying price pressures in the economy. The RBA has considered a number of measures of underlying inflation constructed from the quarterly CPI data, although we have placed particular emphasis on quarterly trimmed mean inflation, calculated using data that has been adjusted for seasonal patterns.¹ This focus on quarterly trimmed mean inflation reflects that it has useful properties, including that it helps to predict near-term headline inflation.

It will take time for the RBA to learn about the properties of the monthly CPI data.

Inflation data in the monthly CPI – particularly measures of underlying inflation – may have different properties to those from the quarterly CPI. The RBA will need to learn about these to use the data effectively to assess underlying inflationary pressures. As more data become available, the seasonal properties of the data will become clearer. For example, due to the short time series, initially the ABS will not be able to apply standard seasonal adjustment techniques to all items; however, standard techniques will be applied to all items by mid-2027. In addition, a longer time series will help the RBA to understand the best way to distinguish temporary noise in the monthly data from genuine information about underlying price pressures in the economy.

When the ABS starts publishing the complete monthly CPI, the RBA will initially continue to focus on measures of underlying inflation from the quarterly CPI (based on the pre-October 2025 collection frequency), such as the quarterly trimmed mean series. These quarterly data, which have well-understood properties and established seasonal patterns, will provide an important source of continuity while the properties of the new monthly series become clear. In conjunction, the RBA will begin to consider underlying inflation measures constructed using the monthly CPI.

As we learn more about the data, the RBA may choose to focus on a measure of trimmed mean inflation that is calculated from the complete monthly CPI. Alternatively, we may choose instead to focus on a different measure of underlying inflation or emphasise a suite of complementary measures if we assess that this will provide more information about underlying price pressures in the economy.

The RBA will continue to produce and publish quarterly (rather than monthly) forecasts for inflation.

Some of the key variables that the RBA uses to forecast the economic outlook, such as GDP and labour costs, are published on a quarterly basis only. For headline CPI inflation, we will forecast year-ended headline inflation based on the quarter-average of the monthly CPI. This is consistent with the approach taken by many other central banks that have access to monthly inflation data. For underlying inflation, initially we will continue to forecast quarterly trimmed mean inflation from the quarterly CPI, although our forecast will be informed by the monthly CPI data. Over time, we will transition to forecasting underlying measure/s constructed solely from the monthly CPI.

For more detail, please refer to Technical Note: The Transition to a Complete Monthly CPI.

Endnote

1 Trimmed mean inflation is the average rate of inflation after ‘trimming’ away the items with the largest price changes (positive or negative) in seasonally adjusted terms. That is, after ranking each item in the basket by the size of seasonally adjusted price changes, trimmed mean inflation is calculated by the weighted mean of the middle 70 per cent of the quarterly distribution of price changes. Relatedly, weighted median inflation is the inflation rate of the item at the middle of the price changes in the CPI basket (the 50th percentile of the quarterly distribution by weight).