Australia’s Annual Inflation Rises to 4.3% in September as Core Measure Advances
Key Facts
Australia’s annual inflation rose to 4.3% in the 12 months to September, compared with 4.0% in August, according to data released by the Australian Bureau of Statistics on October 28. The consumer price index rose 0.8% in September on an original basis and 0.6% after seasonal adjustment. The trimmed mean, a measure of core inflation, increased 3.6% annually, compared with 3.5% in August after a revision to the previous reading. The monthly trimmed mean also rose 0.3% in September. The figures come ahead of the Australian monetary policy board’s meeting on November 2–3, after the central bank raised interest rates in September to address persistent inflationary pressures.
The statistics bureau had cut its annual trimmed mean reading for August to 3.5% from 3.6%, attributing the revision to a change in seasonal factors. The annual reading for the measure therefore rose to 3.6% in September, compared with the revised figure for the previous month. On a quarterly basis, the trimmed mean was 1.0% in the third quarter, according to the release, matching forecasts ahead of publication. The annualized quarterly reading was 3.6%, while the monthly trimmed mean was also 3.6% year over year. That puts the core inflation measure above the bank’s target range of 2–3%.
The Reserve Bank of Australia raised its cash rate target by 25 basis points to 4.60% at its September meeting, in a unanimous decision. The minutes said the strongest case for the increase was that some of the upside inflation risks the bank identified in August “have since materialized or are in the process of emerging.” Those risks included domestic capacity pressures, broadening cost pressures, rising unit labor costs and higher oil prices amid the Middle East conflict. The minutes said market pricing implied an interest rate increase at the September meeting, followed by a further rise of about 15 basis points by year-end. They also pointed to another 30 basis points in the first half of 2027, a path reflecting expectations of further tightening amid price risks.
Annual core inflation at 3.6% leaves policymakers facing a reading above the target range, although the headline index and the trimmed mean measure capture different aspects of price movements. In its August outlook, the bank had projected that trimmed mean inflation would remain above 3% until mid-2027 before declining to 2.5% by early 2028. The board’s next meeting is scheduled for November 2–3, after the September data release and before the next price reading. The statistics bureau is scheduled to release October consumer price index data on November 25. That will be the latest available price data after the November meeting, while the bank’s goal remains to keep inflation between 2% and 3%.