Inflation jumped 1.3% in the September quarter, above economists\u2019 and the Reserve Bank\u2019s own expectations. That is likely to rule out a cut in interest rates next week.<\/p>\n
The Australian Bureau of Statistics today released the consumer price index (CPI)<\/a>, showing headline inflation was almost double the 0.7% increase recorded in the June quarter. <\/p>\n Over the year to September, consumer prices climbed 3.2%, a big increase from 2.1% in the previous quarter, and above the top end of the central bank\u2019s target.<\/p>\n The consumer price index was the last major piece of data before the Reserve Bank meeting on Melbourne Cup day.<\/p>\n The trimmed mean \u2014 the Reserve Bank\u2019s preferred measure of underlying inflation<\/a> \u2014 rose 3.0% over the year, only slightly below the headline rate. That suggests price pressures remain broad-based and persistent.<\/p>\n Housing and energy lead the rise<\/p>\n The main driver of the September-quarter increase was housing, with the sharpest rise in property rates and charges in more than a decade. These jumped 6.3% \u2014 the biggest quarterly rise since 2014 \u2014 as councils across all capital cities lifted general rates, waste levies and other local charges.<\/p>\n Electricity prices also rose sharply, up 9.0%, driven by annual price reviews and the timing of Commonwealth Energy Bill Relief Fund rebates, the Bureau of Statistics said.<\/p>\n Beyond housing, travel costs added further pressure. Domestic holiday travel and accommodation rose 3.2%, pushed up by strong school holiday demand, while international travel increased 2.7% amid continued appetite for overseas trips, particularly to Europe.<\/p>\n While rent inflation eased to 3.8% \u2014 the lowest since December 2022 \u2014 and insurance costs moderated sharply from last year\u2019s double-digit increases, these declines were offset by renewed price pressures elsewhere.<\/p>\n Inflation proves harder to contain<\/p>\n The result came in well above the Reserve Bank\u2019s earlier forecasts<\/a>, confirming inflation remains more stubborn than policymakers anticipated.<\/p>\n Overall, today\u2019s figures point to renewed upside risks for inflation and suggest that the path back to the 2\u20133% target band could take longer than the Reserve Bank had expected.<\/p>\n A reality check for the RBA<\/p>\n The Reserve Bank has already cut the cash rate three times this year<\/a> \u2014 in February, May and August \u2014 taking it from 4.35% to 3.6%. Those reductions were meant to ease pressure after a long period of higher interest rates.<\/p>\n But today\u2019s figures serve as a reminder that the inflation challenge is far from over.<\/p>\n For the Reserve Bank, the path ahead may not be as smooth as hoped.<\/p>\n The RBA now faces conflicting signals: inflation remains at the high end of its target range, while the labour market continues to cool. Unemployment has edged up to 4.5%<\/a>, job vacancies have fallen, and hiring intentions are easing. Household spending has eased slightly<\/a> but not collapsed.<\/p>\n With inflation still elevated, a rate cut in November looks highly unlikely. <\/p>\n What markets are saying<\/p>\n Before the CPI release, traders were still betting on another 25-basis-point cut by Christmas<\/a>.<\/p>\n