October CPI numbers likely to see hopes of interest rate relief dashed as rising inflation will pressure the Reserve Bank to put the brakes on the economy.
In October 2025, inflation — measured by the Australian Bureau of Statistics (ABS) Consumer Price Index — rose 3.8 per cent in the year to October, up from 3.6 per cent in September. This has been the fourth consecutive monthly increase and marks the highest reading in 10 months. For the first time, the ABS released a fully-fledged monthly CPI (rather than only quarterly), making this the first “complete monthly CPI” measure.
Underlying inflation — captured by the trimmed mean (which strips out volatile items) — also ticked up, rising to 3.3 per cent from 3.2 per cent the prior month.
What’s driving the increase?
Several major price clusters drove the inflation uptick, Housing was the largest contributor, with costs up 5.9 per cent over the year. Food and non-alcoholic beverages and recreation and culture both rose by 3.2 per cent year-on-year.
On the goods side, a striking jump was seen in electricity costs, which surged 37.1 per cent — in large part due to a combination of base-year effects and the winding down of state energy rebates.
Among services, rising rents, healthcare, domestic travel, and accommodation also contributed.
On a monthly basis, the CPI reading for October was flat (0.0 per cent) in original terms, though a small 0.3 per cent increase was recorded when seasonally adjusted.
Further rate cuts unlikely
The uptick in inflation likely ends hopes of further interest-rate cuts in 2025. Many economists now point to a rising chance that the Reserve Bank of Australia (RBA) may even consider raising the cash rate again if price pressures remain persistent.
In the wake of the report, borrowing costs are expected to stay elevated, which will have immediate consequences for households — especially those with mortgages, personal loans or credit-card balances.
