Australian inflation hits lowest level since 2021 in boost for borrowers

Australian inflation has fallen to its lowest level in three years, dropping to 2.8 percent annually in the September quarter.

The Consumer Price Index rose just 0.2 percent for the quarter, falling significantly from 3.8 percent in June.

Real Estate Institute of Australia President Leanne Pilkington said the figures pointed to potential interest rate relief.

“The annual figure is the lowest since March 2021 and well below market expectations. It is now within the RBA’s target band of 2–3 per cent,” Pilkington said.

The trimmed mean inflation rate, which excludes large price fluctuations, fell to 3.5 percent from 4.0 percent in June.

This marked the seventh consecutive quarter of declining annual trimmed mean inflation since its peak of 6.8 percent in December 2022.

Recreation and culture recorded the largest quarterly price rise at 1.3 percent, followed by food and non-alcoholic beverages at 0.6 percent.

Rental prices increased by 1.6 percent for the quarter and 6.7 percent annually, down from 7.3 percent in June.

“With all three broad measures of inflation at the lowest they have been since 2021 and the headline rate within the RBA’s target band and the global direction of inflation and interest rates, borrowers can reasonably expect that the RBA’s next move will be down and not up as feared,” Pilkington said.

The data comes ahead of the Reserve Bank’s next board meeting, where both inflation and employment figures will be considered.

Pilkington noted that while employment remained steady, about 70 percent of new jobs in the past year were in public sector roles.

The upcoming release of September retail trade and household spending data will provide additional insights into consumer behaviour before the RBA meeting.