The release of the new monthly Consumer Price Index (CPI) by the Bureau of Statistics has shaken economic expectations, showing inflation is proving stubborn.
Headline inflation rose to 3.8 percent, while core inflation stood at 3.3 percent. The Reserve Bank of Australia (RBA) aims to keep inflation “sustainably” within its 2–3 percent target range, ideally at the midpoint of 2.5 percent. Earlier this year, inflation appeared to hover just above that midpoint, but the latest figures suggest that stability was short-lived.
The data now points to a realistic chance of an RBA interest rate hike within the next six months, marking a dramatic shift in market sentiment. Only weeks ago, markets had priced in a small possibility of a November rate cut, following a spike in the September jobless rate to 4.5 percent.
With inflation running hotter than expected, few economists now anticipate an early 2026 rate cut, underscoring the extraordinary turnaround in monetary policy expectations.
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