Forward View Australia - April 2026: Straight talk - Growth lower, uncertainty higher

24 April 2026
Economy and Markets

• Growth outlook downgraded as uncertainty and cost pressures rise.
• Inflation risks increase with fuel prices expected to flow through to broader prices.
• NAB expects the RBA to lift rates in May before pausing.

Australia’s economic outlook has become more uncertain, with higher fuel prices weighing on growth and adding fresh pressure to inflation, according to NAB’s Australian Forward View.

NAB says recent data suggests the economy entered the fuel price shock from a position of relative strength, but elevated uncertainty and rising costs are likely to slow consumer spending and business investment through 2026.

NAB has modestly downgraded its growth forecasts for 2026, lifted its inflation outlook, and revised its unemployment track slightly higher.

NAB Head of Australian Economics Gareth Spence said inflation risks had intensified just as growth momentum was set to cool.

“Inflation was already running too high before the jump in oil prices, and the flow‑through of higher fuel costs is likely to put further pressure on underlying inflation,” Mr Spence said.

“At the same time, higher costs and rising uncertainty are expected to weigh on household spending and business decisions over the year ahead.”

NAB expects inflation to peak near 5 per cent in the June quarter, driven largely by fuel prices, before easing gradually as cost pressures moderate.

Despite the more challenging backdrop, parts of the economy continue to show resilience. The labour market remains tight, with employment growth strong enough to keep unemployment around 4.3 per cent, while business conditions and capacity utilisation have so far held near long‑run averages.

“Recent business and consumer confidence data point to caution, but underlying activity indicators still suggest the economy is operating close to capacity,” Mr Spence said.

For monetary policy, NAB expects the Reserve Bank of Australia to lift the cash rate by 25 basis points in May, before pausing to assess how higher fuel prices and tighter financial conditions flow through the economy.

“The risk the RBA is managing is whether higher fuel prices become embedded in broader inflation expectations. This is a difficult policy environment, with inflation already elevated and the economy running close to full capacity,” Mr Spence said.

NAB forecasts real household consumption growth of around 1 per cent in 2026, down from 2.4 per cent in 2025, as higher interest rates and fuel costs weigh on real incomes. House price growth is expected to slow but remain positive over the year, supported by strong population growth and tight supply.

Click the link below to read the full report:

Forward View Australia: April 2026 (PDF, 1MB)

Notes:

The NAB Australian Forward View provides NAB’s assessment of the economic outlook across growth, inflation, housing, labour markets, currencies, and monetary policy.