Underlying inflation is growing for the first time since December 2022, with chances of a mortgage payment-easing interest rate cut next week all but gone.
New inflation rates
* The consumer price index rose 1.3% in the September 2025 quarter and 3.2% annually, according to the Australian Bureau of Statistics.
* This is the highest quarterly rise since March 2023.
* Trimmed mean inflation, the Reserve Bank‘s preferred measure for determining whether to cut interest rates, also rose this quarter.
* The new rate of 3% is up from 2.7% in the June quarter.
* Monthly inflation also rose 3.5% in the year to September, up from 3% in August.
What’s Driving the Rise
* Electricity costs are the main culprit, having risen 9% in the previous quarter.
* All capital cities saw power price rises in July after annual price reviews took place.
* Households in NSW and the ACT also did not receive the extension of energy bill relief subsidies in July, affecting the cost of electricity in those places.
* Other big risers included recreation and culture, as well as transport.
* Holiday travel and accommodation rose 2.9% while fuel prices rose 2%.
* Housing (5.6%), food and non-alcoholic drinks (3.1%) and alcohol and tobacco (5.5%) were the main drivers of monthly inflation.
Household goods and services
* Higher prices for eating out and takeaway have elevated food inflation by 3.3% compared to this time last year
* The morning coffee run has also skyrocketed with a 14.6% rise in coffee, tea and cocoa prices.
* Rent (3.8%) and medical costs (5.1%) continue to drive up services inflation.
“Inflation has ticked up today, but it’s much lower than what we inherited, and that reflects the substantial progress we’ve made together in our economy.” Treasurer Jim Chalmers
“These results speak to Jim Chalmers’ failure on economic management.” Shadow Treasurer Ted O’Brien said in response.