The Australian Bureau of Statistics (ABS) has released inflation data for the 12 months to October 2025, with housing costs a key driver.
Rising housing costs have contributed to higher inflation, with the Australian Bureau of Statistics (ABS) reporting a 3.8 per cent increase in the CPI for the 12 months to October 2025, up from 3.6 per cent reported in the year to September 2025.
Housing costs rose 5.9 per cent during the reference period, driven by higher costs for both electricity (up 37.1 per cent) and rents (up 4.2 per cent).
Food and non-alcoholic beverages (up 3.2 per cent) saw the next highest increase, according to the ABS, followed by recreation and culture (up 3.2 per cent).
The ABS also revealed trimmed mean inflation was 3.3 per cent in the 12 months to October 2025, up from 3.2 per cent in the year to September.
The Reserve Bank of Australia (RBA) focuses on underlying inflation, or the trimmed mean, when deciding on interest rates. By filtering out the most erratic price movements, this measure gives a clearer picture of sustained inflation, with the RBA aiming to keep it within a 2–3 per cent range.
The latest release marks the first in the bureau’s shift from a quarterly to a full monthly CPI, aligning Australia with other G20 nations.
The ABS will continue to publish a quarterly CPI – calculated as the average of the three monthly CPIs – which will be included in every third monthly release.
Rate cut implications
The latest cut of data puts a further dampener on the prospect of further rate cuts from the RBA, which is due to provide its last rate cut decision for the year in December.
Domain senior economist Dr Joel Bowman said the latest result came in a touch higher than what the market had expected, citing the impact of government electricity rebates rolling off.
“With inflation drifting up again over recent months, today’s figures make a December interest rate cut even less likely. That’s disappointing news for many mortgage holders heading into Christmas. On the other hand, holding rates steady will help cool some of the price momentum we’ve seen this year – welcome news for people trying to get into the market,” he said.
“We’re also seeing these cost pressures flow through to the price of building new homes, which has been rising since August. If this continues, it could slow the construction of new housing supply Australia urgently needs.”
Bowman also cited the impact of what elevated inflation could mean for the housing market, particularly property investors.
“Investor activity is another major driver of the current housing market lift,” he said.
“Persistently high inflation may strengthen conversations across the industry about potential macro-measures to rein this in – a move that would be welcomed by first-home buyers who are competing with investors in an already challenging market.”
Brokers playing a crucial role
Speaking to The Adviser, Matt Turner, broker at GSC Finance Solutions, said the data suggested an increase rather than a cut was more likely for the next rate change.
“As brokers it’s important to consider what this will mean for clients with long term plans as rate changes will affect borrowing capacity but also future ability to refinance.
“It’s important now to ensure borrowers are prepared for all outcomes whether it be a long term hold, increase or cut.”
Mark Guglielmino, principal broker at Melbourne’s Capra Financial Group, said that with short-term rate relief for consumers unlikely, brokers are more important than ever.
“Given there is less likelihood of short term rate relief for consumers, the importance of Brokers leaning into the strategic side of lending for their clients has never been greater,” he said.
“Deeper conversations with new clients to understand their short and long term goals and objectives will assist brokers in making tailored recommendations, while proactive reviews with existing clients will assist in ensuring any clients who are struggling under the weight of their current repayments have access to assistance through their broker and professional services network.”
A holistic view is also beneficial, according to Guglielmino.
“We’re ensuring to take a holistic view of our clients’ position and ensuring that conversations around affordability go deeper than just the interest rate of the day,” he added.
“We plan for our clients’ short, medium and long term goals and include their other professional services advisers in those conversations.”
[Related: Another major bank rules out more rate cuts]
