Australia’s consumer inflation accelerates to 3.8% in October, overshooting estimates

Australia’s inflation accelerated in October, beating analysts’ estimates and growing at its fastest pace in seven months, data from the Australian Bureau of Statistics showed on Wednesday.

The consumer price index rose 3.8% in October, year over year, marking its fastest pace since April, according to Data released by the ABS Going back in April 2024. That was higher than economists’ average estimate for 3.6% growth in a Reuters poll.

This is the first time that it has ABS Published in full monthly Consumer Price Index, as the government uses the quarterly CPI to monthly gauge as the primary measure of headline inflation.

“The shift to full monthly CPI means we now see all categories of spending every month,” said Sunny Nguyen, head of Australia economics at Moody’s Analytics, adding that the headline and trimmed mean inflation figures were “a bit warmer” than previous indicators had suggested.

The largest contributor to consumer inflation was the housing sector which registered a price growth of 5.9%, driven by higher costs of electricity, rents and new dwellings. Electricity costs rose 37.1% in October as households used government rebates for power bills.

“With national house prices at new record highs, housing affordability has hit new record lows,” said AMP Chief Economist Shane Oliver.

Prices for food and non-alcoholic beverages, entertainment and culture rose 3.2% from a year earlier.

The adjusted average measure of core inflation, which excludes volatile items, came in at 3.3% in October, compared with 3.2% in the previous month, official data showed.

On a monthly basis, headline CPI was flat compared to September and analysts’ estimates for a 0.2% contraction.

Held by the Reserve Bank of Australia Interest rate 3.6% Earlier this month, it said it was cautious about further easing given higher inflation, a stronger-than-expected recovery in consumer demand and a revival in the housing market.

RBA Governor Michelle Bullock said that the current month The cycle of interest rate cuts may be coming to an endThe central bank has forecast inflation to remain above its target range of 2% to 3% until the second half of next year.

“It’s possible there won’t be any more rate cuts. It’s possible there will be some more. But as I said earlier, we haven’t gone that high, so we don’t have to come down that far,” she said. Speech after the November decision.

The central bank expects headline inflation peak at 3.7% In June next year before easing to near the midpoint of the target range towards the end of 2027.

“The October figures again lean towards a narrative of ‘more sustained inflation,'” Nguyen said, adding that any talk of easing would be pushed to the middle or end of 2026.

Improved business conditions and strong economic growth offer the Australian central bank room to keep rates steady to rein in inflation.

A gauge on the state of Australian business was taken in OctoberCompanies reported better sales and profits, according to a National Australia Bank survey earlier this month, rising to the highest level since March 2024.

Australia’s economy expanded more than expected in the second quarter, Growing at 1.8% every yearUnderpinned by domestic spending, including household and government consumption, faster than 1.3% in the previous quarter. The GDP data for the July to September period will be released on December 3.

Australia’s benchmark stock index, the S&P/ASX 200, was 0.73% higher on Wednesday. The Australian dollar fell 0.36% to 0.6491 against the US dollar. The yield on the 10-year government rose 4 basis points to 4.474%.