Electricity rebates tipped to drive October inflation lower in ABS’ new monthly CPI report

What’s is expected in next week’s inflation indicator?

Next week the Australian Bureau of Statistics (ABS) will release the first full monthly Consumer Price Index (CPI) report. Economists at CBA expect it to show a slight drop in overall prices, driven by falling electricity and fuel costs.

Headline inflation is forecast to fall 0.2 per cent in October, bringing the annual rate to 3.6 per cent. Looking ahead, trimmed-mean inflation – which cuts out the most volatile price categories – is expected to ease to 0.8 per cent for the quarter, down from 1.0 per cent in Q3.

“This month’s CPI will be closely watched - not just for the inflation read, but for how well the new monthly framework performs,” said Trent Saunders, Senior Economist at CBA.

“There’s more uncertainty than usual in the estimates, and we expect a wide range of forecasts across the market,” he said. “We expect trimmed-mean inflation to ease slightly in the December quarter, as some of the price spikes seen in September unwind.”

Why has the ABS moved to a monthly report?

The ABS has replaced its partial monthly CPI indicator with a complete monthly CPI. This new version includes all categories of household spending each month- such as school fees, eating out, rent, clothing and services - giving a more accurate and timely picture of inflation. It also brings Australia in line with global best practice.

What is expected to drive the October data?

Electricity prices are expected to fall sharply due to delayed rebate payments in NSW and WA, which were doubled in October. These rebates are scheduled to end in early 2026, although they may be extended in the government’s upcoming Mid-Year Economic and Fiscal Outlook.

Housing costs remain a key focus. New dwelling prices are expected to rise 0.5 per cent in October, while rents continue to climb steadily. Market services, such as dining out and household maintenance, are forecast to fall slightly after a spike last quarter.

What will the Reserve Bank be watching?

The Reserve Bank of Australia (RBA) will continue relying on quarterly inflation data for now, as the new monthly figures need more time to build a reliable track record. Seasonal patterns, like holiday sales or school terms, are harder to adjust for until more data is available.

With inflation expected to stay in the upper half of the Reserve Bank’s 2–3 per cent target band through 2026, CBA economists expect the cash rate to remain on hold throughout next year. The key focus will be watching for signs that underlying inflation is easing, particularly in housing and services, before considering any rate changes.

Read Trent Saunders’ full October 2025 Monthly CPI Preview report.