Australian Inflation Rises to 3.8% in October Amid Housing and Energy Costs

Australia’s annual inflation climbed to 3.8% in October, up from 3.6% in September, according to the first complete release of the Monthly Consumer Price Index (CPI) by the Australian Bureau of Statistics (ABS).

The largest contributors to the rise were housing (+5.9%), food and non-alcoholic beverages (+3.2%), and recreation and culture (+3.2%). Electricity costs, in particular, surged over the year, with an annual increase of 37.1% in October, driven by the expiration of state electricity rebates and the timing of federal relief measures.

ABS head of price statistics Michelle Marquardt said the new monthly CPI replaces the traditional quarterly measure as Australia’s main inflation benchmark, offering a “quicker read” on price changes. However, economists note monthly data can be more volatile and seasonal adjustments will improve over time as the dataset grows.

Housing costs remained the largest single driver of headline inflation, contributing 1.2 percentage points to the overall figure. Increases in rents, new dwellings, and electricity prices all played a role.

Economists say the rise in inflation complicates the Reserve Bank of Australia’s (RBA) monetary policy decisions. EY chief economist Cherelle Murphy said the RBA is unlikely to cut rates at its December 9 meeting and may even consider a rate hike if inflation continues to accelerate. ANZ economist Adelaide Timbrell noted that the monthly CPI’s limited history could affect seasonal adjustments and future trimmed mean calculations, adding uncertainty to policy decisions.

Wages have grown modestly over the past year, but economists warn that rising inflation may erode real income gains if wage growth slows.

As Australia navigates higher housing and energy costs, the RBA faces a delicate balance between supporting economic growth and keeping inflation near its target.