Inflation rise: What that means for all your interest rates
Rising housing and food costs are keeping the CPI above the RBA's comfort zone.
New inflation figures from the ABS are higher than many economists predicted, putting interest rate cuts on hold.
It's bad news for borrowers and anyone who likes paying less for things.
The Consumer Price Index (CPI) rose 3.8% over the last 12 months, up from 3.6% in the last month's annual measure.
It's a small increase, but that's close to 4% and much higher than the Reserve Bank's inflation target band of 2-3%.
Inflation peaked at 7.8% in December 2022 and has fallen every month since then until June this year.
Since then, it's crept back up.
The trimmed mean inflation, a figure that smooths out some of the short-term fluctuations for a clearer trend, is also up.
"Trimmed mean inflation for the complete Monthly CPI was 3.3 per cent in the 12 months to October 2025, up from 3.2 per cent in the 12 months to September 2025," said ABS head of prices statistics Michelle Marquardt.
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What's driving Australian inflation?
Housing is the biggest driver behind recent inflation, up 5.9%. Food and non-alcoholic drinks rose 3.2%.
Services inflation rose 3.9%, driven by rising costs for rent, travel and medical services. Electricity was the main force driving a 3.8% rise in annual goods inflation.
House prices have been on the rise in Australia, driven partly by falling interest rates and the expansion of the federal government's First Home Guarantee Scheme.
No more rate cuts?
The Reserve Bank meets again to decide the cash rate on December 9. At this point, another rate cut looks incredibly unlikely.
It's not only that inflation is higher than the RBA wants it to be, but it's rising. And with December being a big spending month for Australians, we may see inflation rise even further.
A rate cut right now would be a welcome move for borrowers (rates have been lifted 13 times since 2022 and cut only 3 times).
But it's not going to happen again while inflation is this high. More rate cuts would fuel borrowing and drive house prices up even further.
And if inflation keeps rising, we could start 2026 talking about a rate hike instead of a cut.
Sources
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