October’s stronger than expected inflation keeps pressure on the Reserve Bank of Australia to hold rates.
27 November 2025
Inflation climbed to 3.8% annually, above the 3.6% forecast.
Market services costs surged, pointing to sticky price pressures.
Electricity prices fell sharply thanks to government rebates and easing housing costs.
Australia’s first official monthly Consumer Price Index (CPI) from the Australian Bureau of Statistics (ABS) shows inflation running hotter than expected in October. Prices were flat compared to September, but the annual rate jumped to 3.8 per cent, beating forecasts and marking the debut of a more detailed inflation measure.
The new monthly CPI replaces the old indicator and captures a wider range of prices, giving policymakers and households a clearer view of cost-of-living trends. October’s result suggests inflation pressures remain stubborn, even as housing costs eased slightly.
“This outcome reinforces our view that interest rates will stay on hold for an extended period,” said Trent Saunders, CBA Senior Economist. “Signs of a pick-up in market services will be of particular concern for the RBA, but the signal from this release is still far from clear.”
“Uncertainty around how to interpret this new monthly data could see the Board play a straight bat,” Saunders added.
Market services - including insurance and recreation - rose sharply, lifting annual growth to 3.4 per cent. Travel costs surged too, with domestic holiday prices up 3.7 per cent in October.
On the flip side, electricity prices fell 10.2 per cent thanks to government rebates in NSW, ACT and WA. New dwelling price inflation eased slightly, while rents continued their steady climb.
Market services refers to a group of services in the economy where prices are largely driven by domestic factors, such as wages and local demand. These include things like, insurance, dining out, recreation and personal services such as hairdressing.
Economists watch this category closely because it tends to reflect underlying inflation pressures linked to labour costs and demand in Australia. When market services inflation rises, it often signals persistent price pressures are rising.
Energy bills are lower for now, but services like dining out and recreation are getting more expensive. Travel costs are also climbing, adding pressure for families planning holidays.
The Reserve Bank meets in December and is expected to keep rates steady. But with inflation proving sticky, the tone could turn more towards interest rate hikes, especially if services inflation persists.
See Trent Saunders’ full analysis of the October CPI era here
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