Australian inflation hits 4.3% in September, dollar rises 0.3% to 0.7043
Key Facts
The Australian dollar rose 0.3% to US$0.7043 on 28 October, alongside data showing annual inflation in the country accelerated to 4.3% in the 12 months to September, from 4.0% in August. Reuters, in coverage published by The Edge Malaysia, reported the currency level and its gain, while EL7 data showed the Australian dollar–US dollar pair closed the day at 0.7051. Official figures showed the annual increase in the consumer price index exceeded the previous month's reading. Annual trimmed mean inflation, a measure of underlying inflation, also rose to 3.6% in September. The figures come ahead of the Australian monetary policy board's meeting in early November and after the bank raised interest rates in September.
On a monthly basis, the consumer price index rose 0.8% in September on an original basis and 0.6% after seasonal adjustment, according to the Australian Bureau of Statistics. On a quarterly basis, the index rose 1.3% in the third quarter, following a 0.6% increase in the second quarter, while annual inflation for the third quarter was 3.9%, according to Reuters coverage. This annual quarterly reading differs from the 4.3% recorded for the consumer price index in the 12 months to September. Annual services price growth was 4.1% in September, compared with 4.6% for goods, according to bureau data.
The Australian Bureau of Statistics said annual trimmed mean inflation was 3.6% in the 12 months to September, up from the revised August reading of 3.5%. The previous August reading was 3.6% before seasonal factors were revised, changing the month-on-month comparison for the underlying measure. Trimmed mean inflation therefore rose between the revised August reading and September data, while remaining below headline inflation of 4.3%. Alongside the headline index and monthly and quarterly inflation measures, this core gauge provides a multi-measure picture of price pressures. In its forecasts published in August, the Reserve Bank of Australia said inflation was not expected to return to the midpoint of its target range until early 2028.
The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.60% on 29 September, saying inflation remained elevated. The bank added that some of the upside inflation risks it had flagged in August were beginning to materialise, and that global energy prices had become significantly higher than assumed in its forecasts at the time. It said the widening conflict in the Middle East and rising energy prices had contributed to changes in its cost assumptions. In its August forecasts, the bank also said aggregate spending appeared to be slowing and economic growth was expected to slow over the year, with the unemployment rate expected to rise gradually. It said domestic price pressures and the costs of the Middle East conflict would keep inflation elevated in the near term, before it gradually returned to the target range as the economy slowed.
Annual inflation remains above the bank's target range of 2% to 3%. In its August forecasts, the bank said a return to the midpoint of this range was not expected before early 2028. The bank set the target cash rate at 4.60% from 30 September, according to its interest rate tracker page. In the United States, the Federal Open Market Committee kept the federal funds rate target range at 3.75% to 4% on 28 October. The decision was passed by a vote of 10 to 2, according to the committee statement, ahead of the next Australian monetary policy meeting.
The Australian monetary policy board will meet on 2 and 3 November, according to the Reserve Bank of Australia's schedule. The rate decision and policy statement are due on 3 November at 2:30 p.m. Sydney time, followed by a press conference at 3:30, the same schedule shows. The bank says the next interest rate update is scheduled for 3 November. After the bank's meeting, the October consumer price index is due on 25 November, according to the Australian Bureau of Statistics. The schedule places the monetary policy decision and the next price data at two consecutive milestones for tracking the inflation path.