Monthly CPI: How the Change Affects Your Lease Obligations
Summary
The Australian Bureau of Statistics (ABS) has transitioned to publishing the Consumer Price Index (CPI) on a monthly basis, starting in November 2025. Previously, CPI was released only on a quarterly basis.
According to the ABS, the monthly CPI will provide a more frequent and timely read on inflation and will now serve as Australia’s primary measure of headline inflation.
CPI is often used to determine rent increases in commercial contracts, and specifically in commercial and retail lease agreements. So how does this transition to monthly CPI affect your lease and how you calculate rent?
What is the CPI?
The CPI is regarded as Australia’s key measure of inflation. It measures the change in the price of a ‘basket’ of goods and services accounting for expenditure in Australian households and covers the categories including (but not limited to) food, housing, transport, health and education. As prices rise or fall, the total cost of this basket moves accordingly, and CPI captures that movement.
CPI and Lease Agreements
Many commercial and retail leases use CPI to adjust rent paid by the tenant on an annual basis or at a set review date as set out in the lease agreement.
A lease agreement will generally state which ABS published heading should be used for the CPI calculation (eg. All Groups, Melbourne) and the formula as to how to calculate the CPI adjustment. It is important for a landlord or managing agent to be aware of the CPI calculation as set out in the lease and use the correct data provided by the ABS to ensure the rent has been reviewed properly and in line with the lease agreement.
Will Rent Reviews Change?
The CPI rent review mechanism itself does not change and will continue to operate as set out in the lease. Most leases that allow for a CPI adjustment calculate rent using ‘the CPI number for the quarter immediately preceding the review date,’ and that method remains the same under the new monthly CPI system unless the lease agreement is varied.
The ABS is still producing quarterly CPI data however it is now calculated as the average of the three relevant monthly CPIs. As the monthly figures give a more accurate picture of inflation, CPI may fluctuate more than we have seen in the past.
What should Landlords and Managing Agents do?
Review Your Lease Provisions
Review how CPI is defined and calculated under your existing lease agreement. While the ABS has changed how CPI is reported, the contractual mechanisms in most leases will not have automatically updated to reflect this change.
Ensure You Are Accessing the Correct ABS Data
If your lease agreement requires you to calculate CPI based on the preceding quarter, ensure you are accessing the quarterly data which is released by the ABS in every third monthly publication (March, June, September and December).
Be Aware of Changing Rent Review Mechanisms
CPI adjustment formulas are widely used in lease agreements, but with the shift to monthly CPI, it is important to check whether any new lease documents have been updated to reflect this change.
We can assist by reviewing your lease, confirming your rent review mechanisms and calculate CPI adjustments.
Vittoria De Stefano
Principal
M 0407 091 301 | T 03 5226 8520
Evdestefano@ha.legal
Madeleine Luppino
Senior Associate
T 03 5226 8564
Emluppino@ha.legal
Emma Buchanan
Special Counsel
M 0498 563 248 | T 03 5226 8529
Eebuchanan@ha.legal
