Australian inflation drops to 4% in May

• Annual consumer price index inflation dropped to 4% in May.
• The trimmed mean underlying inflation measure rose to 3.6%.
• The decline was driven by a monthly fall in automotive fuel prices.

The Australian consumer price index rose 4% in the 12 months to May, down from a 4.2% increase in the year to April, according to the Australian Bureau of Statistics.

The 4% headline figure represents a deceleration from the previous month, though underlying inflation measures showed an accelerating trend.

"Annual CPI inflation in May was 4%, down from 4.2% in the year to April," said Australian Bureau of Statistics Head of Prices Statistics Rachael McCririck.

Housing costs served as the largest contributor to the annual figure with a 6.5% increase, while electricity costs rose 21.1% over the 12-month period due to the expiration of government utility rebates.

Following the announcement, the Australian dollar was unchanged at $0.66.

The trimmed mean annual inflation rate, which excludes volatile items like automotive fuel, rose to 3.6% from the 3.4% recorded in April.

Automotive fuel prices fell 11.9% on a monthly basis in May following a 7% drop in April, which the bureau attributed to lower global oil prices and a temporary halving of the fuel excise tax.