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Cash-strapped mortgage holders’ hopes havebeen crushed following the latest consumer price index figure. Fresh figures released by the Australia Bureau of Statistics shows the all-important trimmed mean inflation rate came in at 1.0 per cent for the quarter, above the RBA’s expectations. This leaves the annual rate at 3.0 per cent – above market expectations of 2.8 per cent. The higher than expected trimmed mean inflation rate reduces the likelihood of an interest-rate cut in November, as RBA governor Michele Bullock wants inflation to return to the mid point of the bank’s 2 to 3 per cent target. KPMG chief economist Brendan Rynne said today’s results “dampen hopes” of a rate cut next week. “We knew there was going to be an uptick in inflation once electricity rebates were wound back, but unfortunately today’s spike is much higher than any of us anticipated and provides the justification for the RBA to sit on its hands in relation to further rate relief,” Dr Rynne said. RSM Australia economist Devika Shivadekar said the Reserve Bank of Australia will keep their powder dry at next Tuesday’s meeting. “While much of the strength in recent spending figures can be attributed to the timing of electricity rebates, discretionary spending – particularly in travel during the school holidays – has also been notably strong,” she said. NED-6058-Australias-Inflation-Rate Meanwhile, Deloitte Access Economics partner Stephen Smith tipped rate relief would still come – but not until December. “As electricity price rebates roll off, headline inflation was always expected to bounce in the September quarter. Another bounce is expected in the March quarter of 2026,” he said. “Neither of those moves should influence interest rate deliberations with this data unlikely to sway the next decision.” Ms Shivadekar disagrees says it likely means bad news for anyone hoping for a pre-Christmas budget boost. “This renewed momentum is likely to catch the RBA’s attention, and we expect it will prompt them to hold rates steady at next week’s meeting.” Markets immediately changed on the news, with the Aussie dollar rising and the share market falling, as expectations of a rate cut changed. Ahead of Wednesday’s release, the RBA had forecast an increase to the trimmed mean of 0.6 per cent. The central bank uses a trimmed mean inflation rate in its assessments as it may exclude highly seasonal items such as fruit and once a year price changes, such as energy rebates. The more volatile headline inflation rate came in at 1.3 per cent in the September 2025 from 0.7 per cent in the June quarter. This was the highest quarterly rise since March 2023. Headline inflation was 3.2 per cent for the year. More to come
