Australia’s headline inflation sank to its lowest level in more than three years in the September quarter, as lower energy prices and elevated interest rates eased price pressures in the economy.
The annual consumer price index for the July-September period was 2.8%, or the lowest since the March quarter of 2021, the Australian Bureau of Statistics reported on Wednesday.
That outcome compared with the 2.9% pace expected by economists and the 3.8% headline result for the June quarter.
The underlying inflation rate – the trimmed mean that the Reserve Bank watches closely – came in at 3.5%. The result was in line with economists’ forecasts of 3.5% and the 3.9% pace in the June quarter.
Electricity prices fell by 17.3% in the latest quarter, the largest quarterly fall for the index on record, the ABS said. Power bill relief from the commonwealth and the states of Queensland, Western Australia and Tasmania helped. Automotive fuel also fell 6.7%.
Inflation has been on a downward trajectory since the end of 2022 under the weight of 13 interest rate hikes by the Reserve Bank. The RBA governor, Michele Bullock, said last month the central bank would likely want more proof inflation was “sustainably” within its 2-3% target range before it cut the officials interest rate.
Wednesday’s data – along with other signs the cost-of-living crisis is abating – increases the odds that the RBA will start to consider the case for a lower cash rate at either its 4-5 November board meeting or its final one for 2024 five weeks later.
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Prior to the CPI figures, investors were betting there was only a 10% chance of a 25 basis-points RBA rate cut to 4.1% next week and about a one-in-four chance in December. They estimated a reduction of that size was only a certainty in May next year, according to the ASX’s rate tracker.
