Inflation in Australia is holding steady at its lowest level in more than three years, but the underlying numbers are still proving tricky for the Reserve Bank of Australia (RBA).
New data from the Australian Bureau of Statistics (ABS) revealed that the Consumer Price Index (CPI) stayed at 2.1% in October—the same as in September and lower than economists expected. It’s also the lowest inflation rate since July 2021.
Energy rebates and falling fuel prices played a big part in keeping headline inflation at the lower end of the RBA’s target range of 2–3%. But when you look at the underlying numbers, it’s not all smooth sailing.
One key measure of underlying inflation, the trimmed mean, actually went up slightly to 3.5% in October. That’s still above the RBA’s target and the highest it’s been since July. “The drop in electricity and fuel prices made a big difference to the headline figure, but the trimmed mean provides a clearer picture of inflation trends,” explained Michelle Marquardt, head of price statistics at the ABS.
On the flip side, another measure of underlying inflation, which excludes volatile items like fuel and holiday travel, dropped to 2.4%, down from 2.7% in September.
With these mixed results, it’s highly unlikely the RBA will cut interest rates during its upcoming December meeting. The Bank tends to focus on quarterly inflation data, and the next update isn’t due until late January.
For now, Australians can take some comfort in falling energy costs, but the broader inflation picture still shows there’s work to be done to get within the RBA’s target.
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