Why Underlying Inflation Matters More Than the Headline Number for Your Strategy

Inflation is running at 4.6%. It is also running at 3.3%. Both numbers are correct, they measure different things, and for a property investor making decisions that play out over years, the lower one tells you far more than the higher one. Reading the wrong number is how investors panic at the wrong time.

The two numbers, and what separates them

The 4.6% figure is headline inflation, the change in the full basket of goods and services as at March 2026. The 3.3% figure is underlying inflation, measured by the trimmed mean, which strips out the most volatile price movements at both extremes. The gap between them, 1.3 percentage points, is mostly the current fuel and energy shock.

Why the volatile bits are stripped out

Fuel is one of the most volatile items in the basket. It swings hard and fast on global events, which means it moves headline inflation around in ways that say little about the broader trend. A fuel-driven jump in headline can reverse just as quickly if oil prices fall. That is exactly why the trimmed mean exists: to show the persistent, broad-based inflation that does not bounce back next quarter.

Why the Reserve Bank watches the underlying number

The RBA sets rates primarily off underlying inflation, not the headline, because it cannot fix a fuel price by raising the cash rate. With the trimmed mean at 3.3%, still above the 2 to 3% target band, the Bank's concern is that price pressure has become broad rather than confined to fuel.

What this means for your strategy

A property strategy built around the 4.6% headline overreacts to a shock that may not last. A strategy built around the 3.3% underlying reads the real signal: inflation is still above target on a broad basis, rates are more likely to stay high than to fall this year, and the cost of holding and financing property stays elevated until the underlying number moves back into the band.

JSC Property Investments helps you buy with a clear read on what's actually driving rates. Book a Kickoff Call with our team and let's plan your next move with the right numbers.