Australian consumer price inflation slowed more than expected in November, helped by easing electricity costs. However, underlying inflation pressures remained elevated and stayed above the Reserve Bank of Australia’s target range.
According to data released Wednesday by the Australian Bureau of Statistics, headline CPI rose 3.4% year over year in November. This was below market expectations of 3.6% and marked a slowdown from October’s 3.8% reading.
The moderation in inflation was largely driven by electricity prices increasing at a slower pace than in the previous month. In contrast, prices for housing, food, and transport continued to rise, keeping overall cost pressures elevated.
Core inflation remains above target
Underlying inflation showed only limited improvement. The trimmed mean CPI, a key measure closely watched by policymakers, eased slightly to 3.2% in November from 3.3% in October. Despite the small decline, it remained above the Reserve Bank of Australia target range of 2% to 3%.
Goods inflation slowed to 3.3% from 3.8%, helped again by weaker electricity price growth. Services inflation also edged lower, easing to 3.6% from 3.9%, although much of this decline was attributed to seasonal factors rather than a sustained slowdown.
ABS analysts noted that the annual Black Friday sales period had minimal impact on consumer prices during November.
RBA outlook remains cautious
Although inflation cooled in November, the data did little to change expectations around the RBA’s cautious policy stance. The central bank paused its rate-cut cycle in the second half of 2025 and has signaled that interest rates are likely to remain unchanged in the near term due to persistent underlying inflation.
ANZ analysts said the November CPI figures support expectations that the RBA will keep rates on hold at its February meeting. They also noted that policymakers may revisit the possibility of interest rate hikes later this year.
The bank added that inflation pressures are expected to gradually ease as 2026 progresses, with the cash rate forecast to remain steady at 3.60% over the current outlook period.
Inflation pressures had unexpectedly intensified toward the end of 2025, driven by higher housing and food costs. The gradual removal of government electricity subsidies in Canberra also contributed to upward price pressures.
