The Australian Bureau of Statistics (ABS) showed headline inflation rising by 2.1% from a year ago in October, unchanged from September’s reading and slower than August’s 2.7% increase. Analysts had expected price increases to accelerate to 2.8%.
Excluding volatile items and holiday travel, consumer prices rose by 2.4% in October, down from 2.7% in September.
Link to ABS October CPI Report
Meanwhile, the Reserve Bank of Australia’s (RBA) trimmed mean inflation – an alternative measure of underlying inflation – came in at 3.5% in October, up from 3.2% in September.
Details also revealed that:
- Food and non-alcoholic beverages (+3.3%), Holiday travel and accommodation (+8.0%), and Alcohol and tobacco (+6.0%) saw the most significant gains
- Transport (-2.8%) and Electricity (-35.6%) helped offset overall prices, with fuel prices falling 11.5% annually
- Housing costs increased slightly, with Rents up 6.7% year-over-year amid tight rental markets
The report underscores that inflation remains above RBA’s 2% – 3% target band but is gradually moderating, keeping the central bank’s current policy stance in focus as traders look ahead to the next RBA meeting.
Australian dollar vs. Major Currencies: 5-min
Overlay of AUD vs. Major Currencies Chart by TradingView
The Australian dollar, which had been giving up some of its U.S. session gains, edged lower ahead of the release and swung even lower when the annual CPI report came out.
But while the comdoll initially dipped on the broadly cooler inflation reading, it also quickly recovered losses as traders considered that the report is unlikely to change the RBA’s view that inflation “remains too high.”
The post-report upswing lasted for about an hour before Reserve Bank of New Zealand’s (RBNZ) not-so-dovish policy decision caught buying attention while fears over Trump’s potential tariffs weighed on overall risk sentiment.
At the time of writing, the Aussie was trading mixed against its counterparts, showing weakness particularly against NZD and JPY but mixed price action against some other currencies.