Inflation Up, Rates Steady

Underlying annual inflation has increased for the first time since December 2022, and as a result, interest rates remained on hold when the Reserve Bank met on Melbourne Cup Day.

Trimmed mean annual inflation grew to 3% in the September quarter, compared to 2.7% in the June quarter.

Inflation data is one of the figures the RBA considers when setting interest rates. It has a target band for underlying inflation of between 2% and 3%.

As a result, when it met on November 4, it decided to keep interest rates on hold at 3.6%. The RBA says while inflation has fallen substantially since the peak in 2022, more recently it has picked up.

According to the Australian Bureau of Statistics, electricity costs were a major contributor to inflation. It says electricity costs are up 9% as a result of government electricity rebates winding down.

Housing is another major reason for the upward pressure on inflation, with housing costs up  2.5% during the quarter.