Key events for the week ahead
AU: Q3 CPI 

Date: Wednesday, 29 October at 8.30am SGT

In the June 2025 quarter (Q2), headline inflation rose by 0.7% over the quarter, which saw the annual rate ease to 2.1% from 2.4%, the lowest annual inflation rate since March 2021.

The Reserve Bank of Australia’s (RBA) preferred measure of inflation, the trimmed mean, rose by 0.6% quarter-on-quarter (QoQ), allowing the annual rate to fall to 2.7% from 2.9% prior. This marked a tenth quarter of lower annual trimmed mean inflation and equalled the lowest rate of trimmed mean inflation since the December quarter of 2021.

Since then, the market has received two firmer monthly CPI reports predominantly at the headline level. The most recent one (for August released, in late September) showed headline inflation rose by 3.0% year-over-year (YoY) in August, from 2.8% in July. Annual trimmed mean inflation, which provides a better indication of how inflation is trending, eased to 2.6% YoY in August from 2.7% in July.

In the aftermath of the two firmer monthly inflation reports and a weaker-than-expected labour force update for September, the RBA now finds itself in a very awkward position and missing at both ends of its dual mandate. The unemployment rate is set to finish the year well above the RBA’s forecasts of 4.3% and trimmed mean inflation above its 2.6% forecast

Irrespective of whether the Q3 inflation report is hotter than expected, we continue to think the RBA should cut rates by 25 basis points (bp) in November and follow the path of least regret given mounting evidence of a sharp slowdown in the Australian labour market.

The preliminary estimate for the September 2025 quarter (Q3) CPI report is for headline inflation to rise 1.1% QoQ, and for the annual rate to rise to 2.9%. The more significant measure, the trimmed mean, is expected to increase by 0.8% QoQ, which would see the annual rate remain at 2.7%. This should provide the green light for the RBA to cut rates at its meeting in November.

Ahead of next week’s CPI release, the Australian interest rate market is pricing in 17 bp (65% chance) of a 25 bp rate cut for the RBA meeting in November and a cumulative 44 bp of RBA cuts between now and June 2026.

AU all groups CPI and Trimmed mean chart