Australia’s inflation pulse has picked up again, dashing hopes of a near-term rate cut and fuelling debate about whether price pressures are cooling fast enough to satisfy the Reserve Bank.
According to the Australian Bureau of Statistics, the Consumer Price Index (CPI) rose 1.3 per cent in the September 2025 quarter, lifting the annual rate to 3.2 per cent. The jump was driven by housing costs, which climbed 2.5 per cent, followed by recreation and culture at 1.9 per cent, and transport at 1.2 per cent.
This marks the sharpest quarterly rise in more than two years and signals that inflation, while far below its 2022 peak, is proving sticky. The new figures come just as the ABS prepares to switch from quarterly to monthly CPI reporting, with the first full monthly release due on 26 November.
Economists had expected inflation to remain steady or ease slightly, but the 1.3 per cent quarterly rise caught markets off guard. Hugh Riminton, National Affairs Editor at Network Ten, summed up the mood succinctly: “Yikes! Latest quarterly inflation figure is a blazing hot 1.3%—pushing the annual rate to 3.2%, well above the RBA target range. No more talk of rate cuts.”
The Reserve Bank’s target band is 2–3 per cent, and while inflation has moderated since its 2022 highs, the latest surge suggests that domestic price pressures—from rents to utilities—remain embedded.
Bendigo Bank Chief Economist David Robertson said the jump in inflation had reshaped expectations for monetary policy. “The unexpected jump in core inflation to 3%—from 2.7%—makes it very difficult for the RBA to cut rates any further this year—despite the recent uptick in unemployment,” he said.
“A Cup Day cut is now at best around a 1 in 12 chance, having been an odds-on favourite a few days ago,” he added, referring to the Reserve Bank’s November meeting, which coincides with the Melbourne Cup.
Mr Robertson said inflation pressures were evident in electricity prices, new dwelling costs and market services, though he remained cautiously optimistic that underlying inflation could ease below 3 per cent in coming months. However, he now expects the next interest rate cut to be delayed until 2026. “Our revised forecasts still have one more RBA cut, but now not until February 2026,” he said. “Our forecasts for a stronger Aussie Dollar and slightly higher GDP growth in 2026 are unchanged.”
Senator Matt Canavan called the data “terrible inflation data for Australians,” noting that “inflation rose 3.2% over the year, well above expectations.” He said that on a quarterly basis, inflation had accelerated at an annualised pace of 5.5 per cent, the highest in two and a half years. “Unfortunately, thanks to Labor’s economic mismanagement, we may be getting an increase in interest rates soon,” he warned.
The graph released by the ABS shows the broader picture: inflation peaked at over 7 per cent in late 2022 and fell steadily through 2023 and early 2024, before levelling out and now edging up again. Quarterly price growth, which had cooled to near zero earlier this year, has re-accelerated, suggesting that the “last mile” of disinflation may be the hardest.
For households, the data confirms what many already feel at the checkout or when paying utility bills. Housing costs continue to be the largest single contributor to inflation, while categories such as recreation, food and transport remain stubbornly high.
The ABS noted that today’s release marks the end of the quarterly CPI as the primary inflation measure. From November, Australia will move to a full monthly CPI report, bringing the nation into line with most advanced economies. “Today marks the final time that the quarterly CPI will be the primary measure of headline inflation,” the Bureau said. “The first release of the complete Monthly CPI will be published on Wednesday, 26 November 2025.”
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