Inflation in the year to October 31 climbs to 3.8 per cent, further above RBA target for rate cuts

Inflation has risen to the highest level in 16 months as electricity prices surged by more than a third over the year, making another interest rate cut unlikely.

The consumer price index soared to 3.8 per cent in the year to October 31, the steepest annual increase since June 2024, and marked a steep increase from September’s annual pace of 3.2 per cent.

Headline inflation is now even further above the Reserve Bank of Australia’s 2 to 3 per cent target, making a rate cut in 2026 a very remote prospect.

Underlying inflation without volatile items, known as the trimmed mean, grew by 3.3 per cent, up from 3 per cent.

The Federal Government’s $300 a year electricity rebates, in $75 quarterly instalments, are continuing until the end of this year, having been extended in the pre-election March Budget.

But Queensland’s $1000 annual rebate and Western Australia’s equivalent $400 program both finished at the end of June.

This saw electricity prices across Australia soar by 37.1 per cent over the year.

“The annual rise in electricity costs is primarily related to State Government rebates being used up by households, as well as the timing of the rollout of the Commonwealth Energy Bill Relief Fund rebates,” the Australian Bureau of Statistics said.

The futures market had already cancelled the prospect of rate cuts in 2026 before the latest ABS data.

The Commonwealth Bank and NAB had already ruled out any further relief during this cycle. The latest data could see Westpac and ANZ revisit their forecasts of relief next year.

The ABS’s latest comprehensive data for October replaces quarterly inflation data going back to 1948 and short-lived monthly inflation indicator that debuted in September 2022. From today, the ABS is releasing comprehensive data every month based on the bigger basket of goods and services.