The number is back within the central bank’s target range. What this means for interest rates.
Australia’s inflation rate fell to 2.8% in September, putting it back within the central bank’s target range. Here’s what this means for interest rates.
Australia’s annual inflation rate is back within the Reserve Bank’s target range, with the September quarter inflation rate at 2.8.
The overall annual rate was down a full percentage point from the June quarter, roughly in line with expectations.
The Australian Bureau of Statistics said it was the lowest annual inflation rate in more than three and a half years.
As expected, discounts on energy bills and falling prices at the fuel pump weighed on the headline figure, with the quarterly increase coming in at 0.2%, well below the 1% gain in the previous quarter.
Michelle Marquardt, head of price statistics at the Australian Bureau of Statistics, said the figures for this quarter were the lowest since free childcare was introduced in June 2020 during the pandemic.
The closely watched trimmed mean, a measure of underlying inflation that smooths out major price changes at either end, fell to an annual rate of 3.5.
This was in line with consensus expectations and down from the June quarter’s reading of 4.
On a quarterly basis, the trimmed mean rose by 0.8%, compared with a rise of 0.9% in the June quarter.
Overall, inflation has returned to the Reserve Bank of Australia’s 2 to 3 per cent target range, but that doesn’t necessarily mean it will start cutting rates at its next board meeting on Melbourne Cup day.
The underlying indicators that the central bank has been watching are still outside the target range.
Most of Australia’s major banks do not expect policy easing to begin until 2025.
