Inflation Jumps to 3.2 Percent in September

In a major setback for those expecting a rate cut, Australia’s annual inflation rate climbed to 3.2 percent in September, up from 2.1 percent in June, according to the latest data from the Australian Bureau of Statistics (ABS).

The Consumer Price Index rose 1.3 percent over the quarter, while underlying inflation lifted to 3 percent from 2.7 percent.

Data comes ahead of the Reserve Bank of Australia’s (RBA) next monetary policy meeting, where the data will likely weigh on rate-cut expectations.

The central bank had warned that a sustained lift in underlying inflation could delay interest-rate relief.

Power Prices Jump 24 Percent

According to the ABS, electricity prices jumped 24 percent over the year—the single biggest contributor to the rise.

The increase was “primarily related to households in Queensland, Western Australia and Tasmania having higher out-of-pocket costs” after state rebates ended.

Electricity prices rose 9 percent in the September quarter and 8.1 percent in June, driven by annual price reviews and the phasing out of rebates.

Excluding the jump in prices from the loss of rebates, prices would have risen 4.8 percent.

The bureau said the rise reflected the winding down of state electricity rebate programs, including the Queensland $1,000, Western Australia $400, and Tasmania $250 rebates. As these were used up, households began paying full market rates again.

Just a day earlier, Tomago Aluminium, which produces nearly 40 percent of Australia’s aluminium, began consulting staff on a possible closure after failing to secure affordable power beyond 2028.

The company said electricity already makes up more than 40 percent of its operating costs.

Property Rates See Sharpest Rise

Property rates rose 6.3 percent in the quarter—the sharpest rise since 2014—as councils lifted general rates and levies.

Rents were up 3.8 percent over the year, easing slightly from 4.5 percent in June due to stable vacancy rates.

New-dwelling prices rose 0.9 percent annually, slightly higher than 0.7 percent in June, as builders reduced discounts amid a modest pickup in demand. Overall housing costs climbed 2.5 percent in the quarter.

The impact on housing is expected to intensify in the next quarter, with the government’s First Home Buyers Scheme launched in October likely to add further demand.

The RBA has cautioned that while the policy may help some first-home buyers, it may also push prices higher and lead to riskier loans if housing supply does not expand to match the surge in demand.

Food and Everyday Costs

Food and non-alcoholic beverage prices increased 3.1 percent over the year. Coffee, tea, and cocoa rose 15 percent due to global shortages.

Meals out and takeaway food were up 3.3 percent, the strongest rise since mid-2024, reflecting higher labour and ingredient costs.

Fruit and vegetables rose 2.2 percent, easing from 8.6 percent a year earlier. The ABS said, “The rise in trimmed-mean inflation indicates that broader price pressures are entrenched.”

Fuel prices offered limited relief. Automotive fuel rose 2 percent in the September quarter but fell 1.6 percent over the year.

Average national unleaded fuel prices have remained around $1.80 per litre for five quarters.

Maintenance and repair of motor vehicles rose 1.2 percent, while registration and motoring fees increased 2 percent at the start of the new financial year.

The ABS confirmed this was the final quarterly inflation report before moving to monthly publication, giving policymakers a faster read on price trends.