Inflation rate remains at three-year low
The price of goods and services in Australia rose by 2.1% in the 12 months to October, new inflation data released by the Australian Bureau of Statistics (ABS) has revealed.
The latest monthly Consumer Price Index (CPI) indicator is on par with that recorded by the ABS last month, meaning that annual headline inflation has continued to rise at its lowest rate since July 2021.
Digging into the basket of goods and services which is used to measure CPI, the ABS found that the price of alcohol and tobacco (up 6.0%) as well as food and non-alcoholic beverages (up 3.3%), were among the largest drivers of inflation in the year to October.
On the other hand, there were considerable falls in both electricity prices (down 35.6%) and automotive fuel prices (down 11.5%) over the 12-month period.
"The falls in electricity and fuel had a significant impact on the annual CPI measure this month," says Michelle Marquardt, the head of prices statistics at the ABS.
Away from headline inflation, the rate of trimmed mean inflation - which limits the impact of larger price changes - rose by 3.5% in the 12 months to October, which is up on the 3.2% figure recorded the month before.
Banks push back rate forecasts
With the annual headline inflation rate falling within the Reserve Bank of Australia's (RBA) target range of 2-3% for another month, could this be good news for homeowners with a mortgage holding out for a reduction in interest rates?
The issue continues to be trimmed mean inflation - a metric that the Reserve Bank views as an important measure of underlying inflation.
Given that the latest rate of annual trimmed mean inflation (3.5%) remains outside of the target band, experts have suggested that the RBA Board is unlikely to cut interest rates in the immediate future - at least, not at next month's board meeting.
In fact, the thinking from economists at two of the major banks is that mortgaged households will have to wait nearly six months before they start to see any rate relief.
NAB had been anticipating a rate cut in February, but earlier in the month it announced that it was pushing back that forecast to May following the release of stronger-than-anticipated labour market data.
Westpac recently followed suit. In a note published last week, economic spokesperson Luci Ellis commented that the bank was pencilling in rate cuts from the central bank in both May and July 2025.
"Minutes from the latest RBA Board meeting, along with recent public comments from RBA officials, have shifted the balance of probabilities in favour of a later cut."
The Reserve Bank Board is likely to provide an updated insight into its thinking on interest rates as well as a reaction to the latest inflation data when it delivers its monetary policy statement after its final meeting of the year on December 10.
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