Price of retail goods remains high in pre-Iran war data

Shelves — CPI increases remain high despite a drop from January

By Harry Booth March 26, 2026

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The latest consumer price index (CPI) has been released by the Australian Bureau of Statistics (ABS), and it shows that, while price pressures cooled in February, the numbers remain high.

These numbers, alongside the Iran war, keep the looming threat of rising inflation elevated, analysts say.

The CPI figure for February 2026 was 3.7 per cent, 0.1 per cent down from January. Retail goods in the CPI, comprising food and non-alcoholic beverages; alcohol and tobacco; clothing and footwear; and furnishings, household equipment, and services, all rose from February 2025.

Clothing and footwear led the way in month-on-month increases, growing by 2.6 per cent from January to February. Through the same period, food and non-alcoholic beverages fell by 0.1 per cent.

Responding to these figures, Commonwealth Bank’s head of Australian economics, Belinda Allen, warned that these numbers do little to stave off the threat of heightened prices resulting from the ongoing Iran war.

“Only around 12 months ago, we’d effectively declared victory on inflation,” Allen said. “But inflation picked up again in the second half of last year because growth has been running above what the economy can sustainably handle.”

Allen warned that if damage to energy infrastructure and oil supply through the Strait of Hormuz were to persist or worsen, it could be a “worst-case outcome” for the economy.

“The pace of Australian economic growth could effectively halve, while inflation would move well above 5 per cent,” she said.

Adding that the relative economic strength of Australian households could help dampen such threats, Allen said that consumer spending could remain consistent in the short term. “But over time, higher costs and interest rates will weigh on consumption,” she added.

Spending, however, is already showing signs of being affected by soaring fuel costs.

Meanwhile, a national survey of 998 Australians, commissioned and conducted by UserTesting, found that 70 per cent of Australians say they are driving less frequently, with 49 per cent reducing spending on dining out, 38 per cent shopping closer to home, and 50 per cent switching to cheaper brand options.