Inflation in Australia has reached its lowest point since the pandemic, decreasing to 2.8 per cent for the year ending in September, down from 3.8 per cent in June. This marks the first time inflation has returned to the Reserve Bank’s target range since 2021. The quarterly consumer price index recorded a modest increase of 0.2 per cent, the lowest since mid-2020.
Despite this positive news, economic experts, including Treasurer Jim Chalmers, indicate that an interest rate cut is unlikely following the upcoming Reserve Bank meeting. The board is looking for persistent signs that inflation is sustainably within the target range. Additionally, although headline inflation has slowed significantly, core inflation—which excludes volatile items like fuel and food—remains higher at 3.5 per cent.
Chalmers noted that the decline in inflation is a welcome relief for households, suggesting that easing price pressures are benefiting the economy. He stressed that the recent drops are not solely attributed to government energy rebates, implying broader alleviation of underlying economic pressures. Overall, while inflation trends are promising, authorities remain cautious in adjusting monetary policy too swiftly.