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Trimmed mean annual inflation climbed to 3.3 per cent in the 12 months to October 2025, up from 3.2 per cent in the year to September, according to new data released by the Australian Bureau of Statistics (ABS) on Wednesday (26 November).
Underlying inflation – also known as the trimmed mean – is a key figure the Reserve Bank of Australia (RBA) considers when setting the official cash rate, as it removes the most volatile price changes during the reference period in question.
The central bank targets a range of 2–3 per cent.
This latest data release marked the first in the bureau’s transition to a full monthly consumer price index (CPI), with the ABS also reporting a 3.8 per cent rise in CPI for the 12 months to October 2025, up from the 3.6 per cent rise reported in the 12 months to September.
Housing saw the largest increase – rising 5.9 per cent – driven by higher costs for electricity and rents.
This was followed by food and non-alcoholic beverages (up 3.2 per cent) and recreation and culture (also up 3.2 per cent).
Electricity costs rose 37.1 per cent in the 12 months to October 2025, an annual increase largely driven by households using up state government rebates, as well as the timing of the rollout of the Commonwealth Energy Bill Relief Fund (EBRF) rebates.
Meanwhile, rents rose 4.2 per cent during the reference period.
Michelle Marquardt, ABS head of prices statistics, said: “Today’s release marks the transition from the quarterly CPI to the complete Monthly CPI as Australia’s primary measure of headline inflation. The time series for the complete Monthly CPI goes back to April 2024, which is when the ABS began collecting prices for a number of Expenditure Classes more frequently.”
Over to the RBA
The latest inflation data from the ABS comes ahead of the RBA’s final cash rate decision for 2025, scheduled for its December monetary policy meeting on 8–9 December.
Minutes from the central bank’s November meeting suggest limited scope for rate cuts over the next year. The RBA noted that while inflation has fallen substantially since its 2022 peak – as higher interest rates “have been working to bring aggregate demand and potential supply closer towards balance” – it has picked up more recently.
Looking ahead, the board highlighted three key considerations for future decisions: “the implications of the recent rise in inflation; the outlook for the labour market; and whether monetary policy is still restrictive”.
Complete monthly CPI
The data release marks the Australian Bureau of Statistics’ (ABS) transition from a quarterly CPI to a complete monthly CPI, bringing it in line with other G20 countries.
At the time the move was announced, statistician Dr David Gruen AO said adopting a complete monthly CPI as the primary measure of headline inflation would make it easier to compare inflation trends with other advanced economies.
“The transition to a complete, internationally comparable Monthly CPI as Australia’s primary measure of headline inflation will provide better information for monetary and fiscal policy decisions that have a direct impact on all Australians,” he said.
The ABS will continue publishing a quarterly CPI – calculated as the average of the three monthly CPIs – included in every third monthly release.
The December 2025 CPI – due 28 January 2026 – will feature the quarterly indexes for the December quarter.
“This transition has been made possible by the Government’s continuing support for the ABS’ modernisation and our trusted role in informing important decisions that have an impact on everyone’s daily lives,” Gruen added.
Lender reaction
Commonwealth Bank of Australia (CBA) senior economist Trent Saunders said the data reinforced the major’s view that the cash rate will remain on hold for an extended period.
“We do not hear from the RBA until the December meeting. But the clear risk is a switch to a more hawkish tone,” he said.
“Alternatively the RBA Board could maintain a straight bat given the uncertainty over how to read the new monthly data series.”
Speaking to brokers on a NAB Commercial Economics Webinar on Wednesday (26 November), NAB chief economist Sally Auld also noted the RBA may pay more credence to the quarterly trend.
“Monthly data, by definition, is more volatile, so it's going to bounce around more than a quarterly measure. So we need to be aware of that,” she said.
“The second thing is that there are some things in that, in today's monthly inflation release, that we don't have a back history for. So, it's difficult for the statistician to seasonally adjust them. You normally need to have generally about a minimum of three years worth of data to be comfortable seasonally adjusting a data series, and they don't quite have that.”
Auld suggested the central bank will still be most interested in the quarterly trend.
“There will definitely be a signal in the monthly inflation numbers, but I think the Reserve Bank will probably, for the next year at least, rely still on those old quarterly numbers.”
[Related: RBA minutes point to cautious path on rates]