Australia's consumer price index (CPI) rose by 2.1% on year in September, easing from a 2.7% on-year rise in August and a 3.5% increase in July, as reported by the Australian Bureau of Statistics on Wednesday. This inflation news was likely welcome at the Reserve Bank of Australia, which has a 2% to 3% annual inflation band target on the nation's CPI.
However, Australia's CPI excluding fruits, vegetables, holiday travel, and automotive fuels rose 2.7% on year in September, nearing the high side of the RBA's band. Additionally, the annual trimmed mean CPI rose 3.2% on year in September, reported the ABS. In September, Australians faced higher food bills, which rose by 3.3%, while residential rents increased by 6.6% on year.
Conversely, transport bills declined by 3.8% on year in September, and electricity charges dropped by 24.1%, according to the ABS. However, the decrease in electricity bills reflected certain government rebate programs. Similar to many other nations in the Asia Pacific region, Australia's annual inflation rate accelerated during and following the pandemic, having peaked at 8.4% on year in 2022.
This above-target inflation rate compelled the RBA to increase its policy interest rate from a low of 0.10% in late 2020 to 4.35% in February 2024, where it has remained since. Measured quarterly, Australia's CPI rose in the third quarter by 2.8% on year, reflecting a modest increase of 0.2% from the second quarter, added the ABS..