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Major blow for Aussies with a mortgage as the Reserve Bank makes a huge call on inflation Inflation has risen from 2.1 to 3.2 per cent Hopes of rate cut by Reserve Bank dashed READ MORE: Shock graph reveals why everything is so expensive now By NICHOLAS COMINO, NEWS REPORTER, AUSTRALIA and ADRIAN BLACK FOR AUSTRALIAN ASSOCIATED PRESS Published: 00:44 GMT, 29 October 2025 | Updated: 01:26 GMT, 29 October 2025 Mortgage holders are losing hope of an interest rate cut on Melbourne Cup Day after the latest shock inflation figures dashed any chance of reprieve from the Reserve Bank. Underlying inflation has risen to three per cent over the year to September, marking a sharp rise from the 2.1 per cent recorded in June and the highest quarterly spike since March 2023. Housing, recreation and culture, alcohol and tobacco, and communication had the biggest price increases over the most recent quarter, according to the Australian Bureau of Statistics (ABS). Underlying or trimmed-mean inflation is the RBA's preferred measure because it ignores volatile items such as power prices. The previous reading in June was 2.7 per cent. Headline inflation, which covers a broader swathe of the economy, jumped to 3.2 per cent over the year to September, largely because of changes to government energy bill rebates in some states. The Reserve Bank's target band for inflation is between two and three per cent. Analysts were widely expecting inflation to rise, but the figures were stronger than anticipated. The increase in inflation figures means the Reserve Bank is unlikely to cut rates next week (pictured, Governor of the Reserve Bank Michele Bullock) Electricity prices have surged by 23.6 per cent in the last 12 months, while rebates ended The surprise uptick has all but ruled out a rate cut from the Reserve Bank when it meets next Tuesday, with economists now warning it may need to hold firm, or even hike rates again, to keep inflation in check. Households in NSW and ACT missed out on July rebates, only receiving payments from August, while some will get double payments in October to catch up. Recreation and culture costs jumped 1.9 per cent, thanks to a 2.9 per cent surge in holiday travel and accommodation. School holidays in July and September sent domestic prices soaring, while Europe's peak travel season pushed up international airfares and tour prices. Transport costs rose 1.2 per cent, driven by a 2 per cent hike in fuel prices, adding more pressure to household budgets. Electricity prices in the last twelve months have exploded by 23.6 per cent nationally, making it the biggest contributor to annual inflation. The surge was especially felt in Queensland, WA and Tasmania, where generous state rebates from 2024, up to $1,000, have now ended, leaving households exposed to full price hikes. Without those rebates, electricity prices would have climbed nonetheless 5.9 per cent over the past year. Share or comment on this article: Major blow for Aussies with a mortgage as the Reserve Bank makes a huge call on inflation Add comment
