MNI BRIEF: Aussie Q3 CPI Prints Higher Than Expected

Australia’s Q3 headline inflation grew 3.2 % y/y – 20 basis points above expectations and up from Q2’s 2.1% – while trimmed-mean inflation rose to 3.0% from 2.7%, topping forecasts by 30bp, according to data from the Australian Bureau of Statistics released Wednesday.

The higher trimmed-mean reading, which rose 1.0% q/q, is likely to weigh heavily on the Reserve Bank of Australia board’s decision when it meets next Tuesday. (See MNI INTERVIEW: Stronger Q3 Inflation To Limit RBA Easing)

“The CPI rose 1.3% [q/q] in the September 2025 quarter, which is the highest quarterly rise since March 2023,” said Michelle Marquardt, head of prices statistics at the ABS. “The largest contributor to this quarterly movement was electricity costs, which rose by 9.0%. This is the highest annual inflation rate since the June 2024 quarter, when annual inflation was 3.8%.”

The rollback of the government’s electricity subsidies drove the higher electricity costs and had been cited by the RBA in its August forecasts. However, the Bank had expected trimmed-mean inflation – its preferred measure of underlying inflation – to reach 2.6% by the December quarter.