Australian Inflation Surge Scuttles Rate Cut Hopes

By James Glynn

SYDNEY--Australian consumer prices surged in the third quarter, scuttling any hope of a further interest rate cut this year, and potentially in 2026.

The consumer price index rose 1.3% on quarter and 3.2% on year, the Australian Bureau of Statistics said Wednesday. Economists had expected a 3% rise in CPI for the quarter.

It was the biggest quarterly rise in inflation since early 2023, with soaring electricity costs driving the result.

Annual inflation measured in September alone rose 3.5%, the ABS said.

With inflation back above the Reserve Bank of Australia's target band, the prospect of a cut in official interest rates in November has shrunk to zero, and potentially opened up an entirely new phase of inflation management heading into 2026.

"With inflation vastly overshooting the RBA's forecasts, the Bank won't cut interest rates at its November meeting and the chances that it won't loosen policy any further are rising," said Marcel Thieliant, who heads economic research for Capital Economics in Asia.

Trimmed mean annual core inflation was 3.0% in the third quarter, up from 2.7% in the second quarter, the first rise since late 2022.

The main contributors to the quarterly rise were increased costs for housing, recreation, and transport.

Electricity costs rose 9.0% in the quarter, and by 23.6% annually, with Queensland, Western Australia, and Tasmania having higher out-of-pocket costs in the quarter than they did a year earlier as government rebates to offset energy costs expired in some states.

Write to James Glynn at james.glynn@wsj.com

(END) Dow Jones Newswires

October 28, 2025 21:23 ET (01:23 GMT)