RBA economist Plumb: will continue to focus on quarterly CPI for forecasting, while also analysing underlying inflation using monthly CPI data

RBA economist Plumb: will continue to focus on quarterly CPI for forecasting, while also analysing underlying inflation using monthly CPI data

RBA Economist Plumb: Quarterly CPI to Remain Forecasting Focus, Monthly Data to Enhance Underlying Inflation Analysis

The Reserve Bank of Australia (RBA) has confirmed that while the newly introduced complete monthly Consumer Price Index (CPI) will serve as the benchmark for Australia's inflation target, quarterly CPI data will remain central to forecasting efforts for the foreseeable future. This approach, outlined by RBA economist Plumb, balances the need for timely data with the challenges of transitioning to a more frequent reporting framework.

The Australian Bureau of Statistics (ABS) began publishing the complete monthly CPI in late November 2025, replacing the discontinued monthly CPI Indicator. This dataset offers broader coverage of household goods and services, including expanded categories like consumer durables and market services, and incorporates new data sources such as online price scraping and administrative records. However, the RBA will continue to produce quarterly forecasts for headline and underlying inflation, aligning with the release schedules of key economic variables like GDP and labor costs, which are only available quarterly.

For headline inflation, the RBA will forecast the year-ended change in the quarter-average of the monthly CPI (non-seasonally adjusted), a method consistent with international practices. Meanwhile, underlying inflation measures—critical for assessing persistent price pressures—will initially rely on the quarterly trimmed mean series from the existing CPI. This is due to the shorter history of monthly data and the need for more time to establish reliable seasonal patterns.

The monthly CPI, however, will inform near-term assessments of underlying inflation. The RBA will analyze measures derived from the monthly data, such as trimmed mean and weighted median inflation, to complement quarterly analyses. These measures, while more volatile, provide earlier signals of inflationary trends.

Challenges remain, including residual seasonality in some monthly data categories, as the ABS employs alternative adjustment techniques for items with limited historical data. The RBA acknowledges that full confidence in monthly-based measures will take time, with quarterly CPI data continuing to be published alongside monthly figures for at least 18 months.

Over time, as seasonal patterns in the monthly CPI stabilize, the RBA plans to transition fully to monthly data for forecasting and policy analysis. For now, the dual approach ensures continuity while leveraging the enhanced timeliness and coverage of the new dataset.

[^NUMBER] citations refer to the RBA's technical note on the transition to a complete monthly CPI (November 2025).