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Getty ImagesRising inflation means that households and businesses are likely to face higher costs Australia’s trimmed mean inflation, a key measure watched closely by the Reserve Bank of Australia (RBA), rose to 3% annually in the September 2025 quarter—up from 2.7% in June—marking the first increase in this metric since December 2022. This increase comes amid a broader rise in consumer prices, challenging expectations for an imminent interest rate cut by the RBA.What is trimmed mean inflation and why it mattersThe trimmed mean inflation measure excludes the most volatile prices from the Consumer Price Index (CPI) basket to provide a clearer view of underlying inflation trends. The RBA considers it an important inflation indicator because it better reflects sustained price pressures by filtering out temporary spikes or drops.Implications for the RBA’s monetary policyThe rise in trimmed mean inflation casts significant doubt over expectations for a November rate cut by the RBA. After a series of interest rate hikes beginning in 2022 aimed at curbing inflation, the bank had been considering easing rates in late 2025 as inflation looked to be falling toward its target. However, the stronger-than-expected inflation print dampens hopes for imminent monetary easing.Live EventsThe RBA has emphasized data dependency and caution in future moves, indicating they will closely analyze the full quarterly inflation data and broader economic signals before adjusting interest rates.The inflation surge reflects ongoing cost pressures across multiple sectors, with energy costs particularly influential. While the RBA aims to maintain price stability and full employment, balancing these objectives amid volatile economic conditions remains challenging. Despite some signs of easing inflation earlier in 2025, the recent data underscores persistent inflation risks.Recent inflation data highlightsThe Consumer Price Index (CPI) in Australia rose by 1.3% for the September quarter, the steepest quarterly increase since March 2023.Annual CPI inflation jumped to 3.2%, up from 2.1% over the twelve months to the September 2025 quarter. Key inflation drivers in the quarter included a 9% rise in electricity prices due to annual price reviews and the expiration of state government rebates, along with higher housing costs (up 2.5%), recreation and culture (1.9%), and transport (1.2%).The trimmed mean inflation increased from 2.7% to 3.0% year-on-year, indicating that underlying inflation pressures are intensifying rather than easing.What this means for AustraliansThe rising inflation means that households and businesses are likely to face higher costs for essentials like electricity and housing in the near term. For homeowners and those with mortgages, elevated inflation may translate into sustained higher interest rates, increasing borrowing costs. The anticipated delay or absence of a rate cut means financial pressure may persist through 2025 end and possibly into 2026.Add as a Reliable and Trusted News Source Add Now! (You can now subscribe to our Economic Times WhatsApp channel) Read More News onAustralia inflation rateConsumer Price IndexInflationInterest rateMonetary Policyaustraliatrimmed mean inflationReserve Bank of Australiaenergy costs (Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online....moreless (You can now subscribe to our Economic Times WhatsApp channel)Read More News onAustralia inflation rateConsumer Price IndexInflationInterest rateMonetary Policyaustraliatrimmed mean inflationReserve Bank of Australiaenergy costs(Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online....moreless Explore More Stories123
