Australians hoping for an interest rate cut in November will likely have to wait longer after key inflation data came in much hotter than expected.
New figures from the Australian Bureau of Statistics (ABS) revealed that the Consumer Price Index (CPI) rose 1.3% in the September quarter — the largest quarterly increase since March 2023. The trimmed mean, the Reserve Bank of Australia’s (RBA) preferred measure of underlying inflation, climbed 1.0%.
RBA Governor Michele Bullock had earlier said that even a 0.9% rise in the trimmed mean would be considered a “material miss,” highlighting the challenge of bringing inflation back within target.
Over the 12 months to September, headline inflation rose to 3.2%, up from 2.1% in June and the highest level since June 2024, pushing it beyond the RBA’s 2–3% target range. The trimmed mean also increased to 3.0% from 2.7%, marking the first quarter-to-quarter rise since December 2022.
Economists had expected the CPI to hit 3.0% and core inflation to hold steady at 2.7%, making today’s data a sharper-than-anticipated outcome.
9News Money Editor Effie Zahos said the hotter-than-expected numbers had effectively eliminated any chance of a November rate cut. “This was the missing piece of the puzzle before the RBA meets next week on Melbourne Cup Day,” she said. “You can guarantee there’ll be no rate cut… these are not the numbers we wanted to see.”
Market expectations for a rate cut next week have now dropped to just 12%, down from 81% less than two weeks ago.
The main driver behind the inflation surge was rising electricity costs, as state rebates in Queensland, Western Australia, and Tasmania expired, while federal energy relief payments were only distributed in certain states. Annual energy price increases that took effect in July also pushed costs higher across the country.
