Trimmed mean inflation has accelerated to hit the top of the RBA’s 2–3 per cent target band, reducing the probability of a rate cut next week.
Underlying annual inflation has accelerated to 3.0 per cent for the September quarter, up from 2.7 per cent in the June quarter and weakening the argument for cutting interest rates.
The figures mark the first time trimmed mean annual inflation has increased since December 2022.
Over the 12 months to the September quarter, the consumer price index (CPI) rose 3.2 per cent, jumping from 2.1 per cent in the June quarter, according to data released by the Australian Bureau of Statistics.
The most significant price rises for the quarter were housing (up 2.5 per cent), recreation and culture (1.9 per cent higher), and transport (up 1.2 per cent).
A 9 per cent rise in electricity costs was a significant contributor to the growth in housing inflation and broader inflation during the quarter.
Annually, the main contributor to the increase in inflation was a 23.6 per cent surge in electricity costs. That was partly driven by state government electricity rebate programs having finished.
The 6.3 per cent rise this year in property rates and charges was the highest since 2014, reflecting increases in general rates in all capital cities, higher waste levies, and additional levies charged by councils.
Property rates and charges typically increase in the September quarter as local councils review their rates and levies.
Annual inflation continued to ease for rents and remains low for new dwellings.
Rental prices rose 3.8 per cent over the year to the September quarter, down from 4.5 per cent to the June quarter.
The change is the weakest annual rise since the September 2022 quarter. The easing in annual rental price growth continues to reflect stable vacancy rates across most capital cities, according to the ABS.
New dwelling prices rose 0.9 per cent over the year to the September quarter, up slightly from 0.7 per cent to the June quarter.
Commenting on the data, Michelle Marquardt, ABS head of prices statistics, said: “The CPI rose 1.3 per cent in the September 2025 quarter, which is the highest quarterly rise since March 2023. The largest contributor to this quarterly movement was electricity costs, which rose by 9.0 per cent.”
Reflecting on the annual inflation rate for the September 2025 quarter, she added: “This is the highest annual inflation rate since the June 2024 quarter when annual inflation was 3.8 per cent.”
The annual trimmed mean or underlying inflation is one of the figures the Reserve Bank of Australia (RBA) is most interested in when setting the official cash rate. The central bank has set a target band for underlying inflation of 2–3 per cent.
After the inflation data came in higher than expected, the market is now almost unanimously forecasting a rate hold from the RBA next week.
The Commonwealth Bank of Australia (CBA) revised its cash rate outlook, saying the “material upside surprise” to the trimmed mean inflation, and its broad‑based nature, meant it now expected the RBA to hold rates for a “prolonged period”.
Westpac chief economist Luci Ellis also hinted at a possible forecast revision, saying that it is “conducting a full reassessment for the cash rate outlook in light of both the inflation outcome and the evolving picture on domestic demand”.
Bendigo Bank updated its cash rate forecasts, now expecting one more RBA cut in February 2026.
[Related: RBA will not ‘leap at a single number’ with cash rate call]
