Each period the ABS ranks every item in the CPI by its price change and removes the 15% with the largest rises and the 15% with the largest falls, by weight. The average of what is left is the trimmed mean.
Because it drops different items each time, it is robust to one-off shocks such as a fuel price spike or a government rebate on electricity.
Why it matters
The RBA sets rates to bring underlying inflation back to its 2–3% target band, aiming for the 2.5% midpoint. Markets watch the trimmed mean more closely than the headline figure for that reason.
See the data: Australian trimmed mean.
General information, not advice.