Australia’s inflation accelerated again in October, delivering a hotter-than-expected print that has all but extinguished hopes of further rate cuts and even revived talk of a possible hike next year. New monthly CPI data from the ABS showed headline inflation rising 3.8% y/y — the fastest in 10 months and above the 3.6% forecast — marking a fourth straight month of re-acceleration since the June low. The trimmed mean climbed to 3.3%, also continuing its upward trend.
Markets reacted sharply: the Australian dollar gained 0.5% to US$0.6502 and three-year yields spiked 11bps to 3.855%, the highest since February. Rate-cut expectations for May dropped from 40% to just 8%, while the probability of a hike by late 2025 rose to 32%. Economists described the report as “ugly,” warning the RBA cannot consider easing and may even need to contemplate tightening if inflation and services-sector pressures remain stubborn.
Although the new full monthly CPI series adds more detail, the RBA still prefers quarterly data given volatility in the monthly numbers. Even so, the broad-based nature of October’s rise — including firmer services inflation at 3.9% and housing inflation at 5.9% — underscores the challenge for policymakers after three cuts this year. Economists say the Bank must ensure inflation heads back toward the 2–3% band, though the full impact of prior easing has yet to flow through.
