Aussie homeowners brace for more mortgage pain as inflation accelerates again
Inflation accelerated again in the September quarter despite four interest rate increases this year, bolstering expectations the Reserve Bank could tighten monetary policy again when it meets next week on Melbourne Cup day.
The Reserve Bank’s preferred measure of underlying inflation, the trimmed mean, rose 1 per cent in the September quarter, up from 0.8 per cent in June, according to Australian Bureau of Statistics data.
On an annual basis, trimmed mean inflation climbed to 3.7 per cent from 3.6 per cent, exceeding economists’ forecasts and remaining above the Reserve Bank’s 2 to 3 per cent target range.
The trimmed mean is closely watched by the central bank because it strips out volatile price movements and is the key measure considered when setting the official cash rate.
The latest result means underlying inflation has climbed to its highest level since March, when it stood at 4.6 per cent.
The figures also cast fresh doubt on the Albanese government’s previous claims that Australia’s inflation problem had largely been defeated.
In January 2025, Treasurer Jim Chalmers declared that the country had turned a corner on inflation after headline inflation fell to a near four-year low of 2.4 per cent in the December quarter.
‘The worst of the inflation challenge is now well and truly behind us, and that’s one of the reasons why we are confident but not complacent about the economy in the year ahead,’ Chalmers said at the time.
Inflation levels are the highest since March, putting pressure on Jim Chalmers (pictured)
Michele Bullock (pictured) and the Reserve Bank are expected to hike rates in November
The Treasurer also argued that the economy was on track for a ‘soft landing’, saying: ‘The soft landing that we have been planning for and preparing for is now looking more and more likely.’
Housing was the biggest driver of annual inflation, with prices rising 5.2 per cent in the year to September.
This increase was largely fuelled by higher costs for new homes and electricity, as builders continued to pass on rising labour and material expenses.
New dwelling prices climbed 4.7 per cent over the year, a slight slowdown from the 5.4 per cent annual rise seen in August.
Transport was the second-biggest contributor to inflation, up 8.7 per cent over the year as motorists grappled with soaring fuel costs.
Automotive fuel prices jumped 9.4 per cent in September alone, following a 14.8 per cent surge in August, largely due to higher global oil prices, driven by
The spike in fuel highlighted the difference between the headline inflation rate and the Reserve Bank’s preferred underlying measure.
Markets are increasingly betting the Reserve Bank will deliver another interest rate increase next week, with traders pricing in more than a 60 per cent chance of a fifth rate hike.
