Inflation in Australia remained steady in October 2025, with no month-on-month change, contrary to expectations of a decline. The Australian Bureau of Statistics reported a consumer price index (CPI) of 0.0% m/m, while year-on-year inflation reached 3.8%, exceeding forecasts of 3.6%.
The absence of any monthly increase poses challenges for monetary policy, particularly as the Reserve Bank of Australia (RBA) considers potential interest rate adjustments. Core inflation metrics, which often guide such decisions, indicate a trimmed mean inflation rate of 3.3% y/y, underscoring a persistent inflationary environment.
Impact on Monetary Policy
The latest data suggests that any prospects for immediate interest rate cuts by the Reserve Bank of Australia are unlikely. Given the inflation figures, the RBA may need to maintain its current rates or even consider increases to manage inflation effectively. Analysts had hoped for a slight decrease in the CPI, which would have provided the RBA with more room to maneuver.
Inflation has significant implications for consumers and businesses alike. With prices remaining high, the cost of living continues to be a pressing concern for many Australians. The RBA’s decisions will therefore be closely monitored for their impact on economic growth and household spending.
Shift in Reporting Standards
This monthly CPI data now serves as the primary inflation indicator, replacing the previously standard quarterly release. The shift emphasizes the importance of more frequent updates, offering a clearer view of current economic conditions. As the data evolves, it will be essential for policymakers and market participants to adapt to this new framework.
The Australian Bureau of Statistics has committed to providing ongoing updates as new data becomes available. With inflation proving to be a persistent challenge, stakeholders across the economic spectrum will need to stay informed about changes and trends in the Australian economy.
