Australia’s Q3 CPI came in softer than anticipated, with consumer prices rising just 0.2% qoq, down from 1.0% qoq in Q2 and below expectations of 0.3% qoq. This marks the lowest quarterly increase since Q2 2020.
On an annual basis, CPI slowed from 3.8% yoy to 2.8% yoy, comfortably returning to RBA’s target range of 2-3% and registering the lowest year-over-year inflation rate since Q1 2021.
Core inflation, measured by trimmed mean CPI, showed resilience with a 0.8% qoq rise, down from Q2’s 0.9% qoq, but slightly above the expected 0.7% qoq. Annually, trimmed mean CPI slowed from 3.9% yoy to 3.5% yoy, aligning with market expectations.
The breakdown shows a notable shift in price pressures: annual goods inflation dropped sharply from 3.2% yoy to 1.4% yoy, largely due to substantial declines in electricity and fuel costs. However, services inflation edged up slightly from 4.5% yoy to 4.6% yoy, driven by higher costs in rents, insurance, and child care.
September monthly CPI echoed this trend, slowing significantly from 2.7% yoy to 2.1% yoy, undershooting expectations of 2.3% and marking the smallest annual increase since July 2021.
This softer inflation data should provide the RBA with room to consider easing its policy stance in the coming months, should inflation remain within target.
