Rate cut hopes all but dashed after inflation data comes in hot
Australians hoping for an interest rate cut in November will likely have to wait a while longer after crucial inflation data came in far hotter than expected.
The new figures from the ABS revealed the consumer price index rose 1.3 per cent in the September quarter, the largest quarterly rise since March 2023, while the trimmed mean – the RBA's preferred measure of underlying inflation – was up 1.0 per cent.
Reserve Bank Governor Michele Bullock said on Monday that even a 0.9 per cent result on the latter measure would be a "material miss".
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The ABS has released fresh inflation data which has all but scuppered any chance of a rate cut in November. Getty
Over the 12 months to September, headline inflation rose to outside the RBA's target range at 3.2 per cent – up from 2.1 per cent in June and the highest level since June 2024 – while the trimmed mean reached 3.0 per cent, up from 2.7.
It's also the first time the annual trimmed mean measure has risen quarter-to-quarter since December 2022.
Economists had been expecting the CPI to come in at 3.0 per cent, while core inflation had been forecast to stay at 2.7 per cent.
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9News money editor Effie Zahos said the unexpected surge had ended any chance of a rate cut in November.
"This was the missing piece of the puzzle before the RBA meets next week on Melbourne Cup day," she said.
"And you can guarantee there'll be no rate cut. I mean, that's my opinion. It'd be interesting to see the commentary flowing...
"These are not the numbers we wanted to see. So the chance of a rate cut, now the market is saying just 12 per cent for next Tuesday."
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RBA Governor Michelle Bullock and her monetary policy board look almost certain to keep rates on hold next week. Renee Nowytarger
Less than two weeks ago, the market had priced in an 81 per cent chance of a cut.
The main driver of the surge in inflation was rising electricity costs, as state rebates in Queensland, Western Australia and Tasmania finished while federal energy relief payments were distributed in some jurisdictions but not NSW and the ACT.
Meanwhile, annual energy price increases came into effect in July, pushing costs up across the country.
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