Australian inflation rises to 4.3%, prompting market speculation on RBA rate move
Headline inflation in Australia climbed to 4.3% in September, above expectations, as housing and fuel costs drove the increase and markets weigh the likelihood of another Reserve Bank rate hike.
Australia's consumer price index for September showed headline inflation of 4.3% year-on-year, surpassing most forecasts. The rise was led by a 5.2% increase in housing costs and a 9.4% jump in automotive fuel prices, according to ABS price statistics chief Rachael McCririck.
The trimmed-mean inflation measure was revised to 3.5% for the month, keeping it above the Reserve Bank of Australia's (RBA) 2-3% target range. Analysts noted that the data could influence the RBA’s upcoming policy decision, with market pricing indicating a roughly 60% chance of a rate increase at the meeting scheduled for early next week.
Bank forecasts are split: ANZ and Westpac anticipate a hike, while Commonwealth Bank and NAB expect rates to hold. RBA assistant governor Sarah Hunter told 60 Minutes that the board has already implemented four rate increases this year and that higher rates remain the primary tool to curb inflation, despite the associated hardship for households.
Economists highlighted that the underlying inflation measures remain elevated, with market services inflation projected at 4.3% and persistent inflation around 3.8%. The combination of rising housing prices, fuel costs and limited easing in core price pressures suggests continued challenges for the RBA in achieving its inflation target.