Pedestrians at Pitt Street Mall on Thursday, July 24, 2025 in Sydney, Australia.
Brendon Thorne Bloomberg | Getty Images
Australia’s inflation rate accelerated in October, beating analysts’ expectations and rising at the fastest pace in seven months, data released by the Australian Bureau of Statistics on Wednesday showed.
Based on data published by ABS through April 2024, the consumer price index rose 3.8% year-on-year in October, the fastest pace since April. This beat the average 3.6% rise expected by economists polled by Reuters.
This is the first time the ABS has published a complete monthly consumer price index, as the government moves from quarterly CPI to using a monthly index as the main indicator of headline inflation.
“The move to a fully monthly CPI means we now know every spending class every month,” said Sunny Nguyen, head of Australian economics at Moody’s Analytics, noting that the headline and trimmed average inflation figures were “slightly hotter” than previous indicators had suggested.
The biggest contributor to consumer inflation was the housing sector, where prices rose by 5.9% due to rising costs of electricity, rent and new homes. Electricity bills jumped 37.1% in October as households exhausted government rebates on their electricity bills.
AMP Chief Economist Shane Oliver said: “House prices across the country are at record highs and housing affordability is at record lows,” citing a severe housing shortage.
Prices for food, non-alcoholic beverages, entertainment and culture increased by 3.2% year-on-year.
According to official data, the trimmed average underlying inflation, which excludes variable items, was 3.3% in October, compared with 3.2% in the previous month.
On a monthly basis, headline CPI was flat compared to September, with analyst expectations contracting by 0.2%.
Earlier this month, the Reserve Bank of Australia left interest rates unchanged at 3.6%, saying it was cautious about further easing given rising inflation, a stronger-than-expected recovery in consumer demand and a revival in the housing market.
RBA Governor Michelle Bullock said in May that the current rate-cutting cycle may be nearing an end and that the central bank expects inflation to remain above its target range of 2-3% into the second half of next year.
“There may be no further rate cuts. There may be further rate cuts. But as I said earlier, we didn’t cut rates that much, so we may not need to cut rates that much,” he said in a speech after the November decision.
The central bank expects headline inflation to peak at 3.7% next June, before easing to near the midpoint of its target range towards the end of 2027.
“October’s data again leans towards the ‘more persistent inflation’ narrative,” Nguyen said, predicting that the debate on easing will be pushed back to mid or late 2026.
Improving economic conditions and strong economic growth have given Australia’s central bank room to keep interest rates stable to control inflation.
A National Australia Bank survey earlier this month showed indicators of Australia’s business conditions picked up in October, with companies reporting improved sales and profits, rising to their highest level since March 2024.
Australia’s economy expanded more than expected in the second quarter, growing 1.8% year-on-year, an acceleration from 1.3% in the previous quarter, supported by domestic spending, including household and government consumption. GDP statistics for the July-September period will be released on December 3rd.
Australia’s benchmark stock index, the S&P/ASX 200, rose 0.73% on Wednesday. The Australian dollar fell 0.36% against the US dollar to A$0.6491. The 10-year Treasury yield rose 4 basis points to 4.474%.
