Australia’s first full Monthly Consumer Price Index has arrived with a stronger than expected rise, showing annual inflation at 3.8 per cent in the year to October 2025, up from 3.6 per cent in September. The figures point to ongoing pressure from housing, electricity and core services, even as rebates momentarily pulled some costs lower in October.
Economists were unsettled by the result, given the soft monthly electricity reading helped keep the headline figure steady. Analyst Tarric Brooker said: ‘The first full Australian Monthly CPI result comes in significantly hotter than expected, with annual inflation rising to 3.8% despite a 10.2% fall in electricity prices for the month. A deeply problematic result.’
Housing is still driving most of the inflation pulse. Prices across the category rose 5.9 per cent over the year, and electricity remains the sharpest pressure point. Power bills increased 37.1 per cent over the year to October, up from 33.9 per cent in September, largely because of shifts in government support. State rebates used by households in Queensland and Western Australia last year have now run their course, while the staged rollout of the Commonwealth Energy Bill Relief Fund and its 2025 extension has changed when discounts appear on bills. After removing the effect of rebates, electricity prices rose 5.0 per cent over the year, driven by annual price reviews from retailers in July 2025. The monthly fall of 10.2 per cent in October came from catch up EBRF payments in New South Wales and the ACT, along with the start of extended rebates in Western Australia.
Rents increased 4.2 per cent through the year, compared with 3.8 per cent in September, although the ABS notes that last year’s increase in Commonwealth Rent Assistance creates a softer base for comparison. Without the various rent assistance changes over the past 12 months, annual rent inflation would have been 4.5 per cent, slightly down on the month before. New dwelling prices rose 1.7 per cent over the year, with builders in some cities lifting base prices after reducing promotional discounts earlier in the year.
Food and non alcoholic beverages held steady at 3.2 per cent annual inflation. Meals out and takeaway food rose 3.6 per cent as higher labour and ingredient costs flowed through. Meat and seafood climbed 3.8 per cent, led by Lamb and goat at 14.6 per cent and Beef and veal at 10.5 per cent, reflecting strong overseas demand for Australian red meat. Fruit and vegetable prices rose 1.8 per cent, with a 3.1 per cent rise for fruit in October alone due to higher prices for strawberries, raspberries and apples. Non alcoholic drinks rose 4.8 per cent over the year, with Coffee, tea and cocoa up 16.4 per cent because of tightened global supply. Egg prices increased 6.2 per cent over the year, easing back from the earlier spike caused by bird flu.
Across the economy, goods inflation held at 3.8 per cent while services inflation rose to 3.9 per cent, driven by rents, medical and hospital services and domestic travel. Spending on holidays has picked up again. ‘The monthly increase in Domestic travel of 5.9 per cent in October 2025 was higher than the 3.4 per cent rise in October 2024. The higher monthly increase this year was due to school holidays occurring in all states and territories in October along with major sporting events leading to higher demand for domestic travel,’ Ms Marquardt said.
Treasurer Jim Chalmers pointed to the flat monthly result as evidence that cost of living measures were cushioning households. ‘Inflation was flat in the month of October, higher than we’d like in annual terms but still much lower than under the Liberals, and partly driven by temporary factors like state energy rebates. We know people are still under pressure and that’s why our responsible cost of living relief is so important.’
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