Data from the Australian Bureau of Statistics indicated on Wednesday that inflation in Australia has increased faster in October, surpassing the estimations of the analysts and surging at its highest rate in seven months.
The official release indicates that the consumer price index increased at a rate of 3.8 percent in October on a year-on-year basis, the highest rate since April. Reuters poll projected that it was higher than economists’ anticipations, at an average of 3.6 percent.
It is the first time that the ABS has published the full monthly consumer price index, as the government has moved to the quarterly CPI towards the use of the monthly gauge as the primary measure of headline inflation.
The Head of Australia economics at Moody’s Analytics, Sunny Kim Nguyen, said, “The shift to a complete monthly CPI means we now see all expenditure classes each month.” He highlighted that the headline and shortened mean inflation figures ran “a little hotter” than the earlier indicators had recommended.
The housing sector was the greatest contributor to consumer inflation with price growth of 5.9 percent, and this was as a result of increased costs in electricity, rents, and new dwellings.
Therefore, the electricity rates increased 37.1 percent in October, with households exceeding government power bill rates.
Chief economist of AMP, Shane Oliver, stated that “With national home prices at new record highs, housing affordability has reached a new record low,” adding a dire undersupply of housing.
Food and non-alcoholic drinks, recreation, and culture increased their prices by 3.2 percent compared to the previous year.
The official data reported that the trimmed mean value of underlying inflation, which excludes volatile components, stood at 3.3 percent in October, in comparison to 3.2 percent in the previous month.
The headline CPI was flat as compared to September, and the estimates by analysts were that the index would shrink by 0.2 percent every month.
In its previous meeting in early this month, the Reserve Bank of Australia maintained interest rates at 3.6 per cent, indicating that it remained wary of reducing them further as it saw an increase in the inflation rate and a stronger-than-anticipated rise in consumer demand, and a housing market rebound.
RBA Governor Michele Bullock added that the current interest rate cut cycle would likely come to an end and that the central bank predicted that inflation would remain above its target rate of 2-3 percent until the second half of next year.
In context to the November’s decision, she said that “It’s possible that there are no more rate cuts. It’s possible there’s some more. But as I said earlier, we didn’t go as high, so we might not have to come down as far.”
Central bank anticipates that headline inflation will reach its peak of 3.7 percent in June next year and then decelerate into the middle of the target range by the end of 2027.
“The October figures again lean toward the ‘more persistent inflation’ narrative,” said Nguyen, forecasting that any discussion for easing will be moved to mid or late 2026.
Better business environment and strong economic growth provide the Australian central bank the space to ensure that it maintains rates constant to check inflation.
In the second quarter, the Australian economy grew faster than anticipated, rising by 1.8 percent year-on-year, faster than in the previous quarter, which was 1.3 percent, and supported by domestic spending, such as household and government consumption.
However, the GDP data for the July to September period will be released by December 3. Australia’s benchmark stock index, S&P/ASX 200, was 0.73 percent up on Wednesday. The Australian dollar was 0.36 percent to 0.6491 against the U.S. dollar. The 10-year government yield increased by 4 basis points to 4.474 percent.
