Australia’s annual inflation rises to 4.3% before Reserve Bank rate decision
September’s consumer price figures put renewed pressure on the Reserve Bank of Australia ahead of its 3 November decision, though a further rate rise remains undecided.
Australia’s annual inflation rate rose to 4.3% in September, according to the Guardian’s report on figures released Wednesday, 28 October, by the Australian Bureau of Statistics. The rise puts renewed attention on the Reserve Bank of Australia’s interest rate decision scheduled for 3 November, with another increase still a possibility rather than a decision.
ABC News reported that the consumer price index rose 0.8% during September, twice August’s 0.4% monthly increase. The annual rate climbed from 4% in August to 4.3% in September. The monthly and annual figures describe different periods: one measures the change during September, while the other compares prices with a year earlier.
Housing led September’s annual price rise
Housing was the largest contributor to annual inflation, with housing prices up 5.2%, Australian Bureau of Statistics head of price statistics Rachael McCririck said, according to ABC News. That component helps explain why the headline figure matters to households already facing higher costs: housing accounted for the largest part of the reported annual increase.
The annual trimmed mean, which excludes unusually large price movements to gauge underlying inflation, rose to 3.6% in September. ABC News said the August figure was revised down to 3.5%. The Guardian described underlying inflation as the Reserve Bank’s preferred measure, making the rise relevant to its assessment of whether price pressures are easing.
What the figures mean for the 3 November rate decision
The Reserve Bank’s cash rate stands at 4.6%, its highest level in 15 years, the Guardian reported. The rate informs borrowing costs, including mortgage rates. Another increase would therefore matter directly to borrowers, while the September figures add to the inflation evidence the bank must weigh before its next decision.
Reserve Bank deputy governor Andrew Hauser warned last week that the inflation outlook looked ‘materially worse’ than the bank had forecast, ABC News reported. That warning preceded the September release. The Guardian reported that most economists expected another increase at the November meeting, while ABC News said market pricing put the chance above 60% before the new figures were released. Those expectations do not establish what the board will decide.
The board is due to begin its meeting on 2 November and announce its decision on 3 November, alongside updated economic forecasts, according to ABC News. Those forecasts will show how the bank assesses inflation after the latest figures; the rate decision itself remains pending.
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Sources and context
- Australia’s inflation rate rises to 4.3%, fuelling fears of fifth interest rate hike this yearThe Guardian
- Breaking: Inflation surges more than expected ahead of RBA meetingABC News Australia
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