Australia’s Inflation Moderates in November as Core Price Pressures Remain Resilient
Consumer prices eased more than expected, but underlying inflation stayed above the Reserve Bank’s target, keeping future interest rate moves uncertain
Australia’s headline inflation rate slowed in November 2025, providing some relief to households and policymakers, but the persistence of elevated core price pressures underscored ongoing challenges for the economy.
New data from the Australian Bureau of Statistics show that the Consumer Price Index rose by three point four percent in the year to November, down from three point eight percent in October, and below economists’ forecasts.
The moderation was driven in part by price declines in clothing, footwear, household furnishings and recreational activities, seasonal discounting and softer electricity price growth.
Despite the headline slowdown, the Reserve Bank of Australia’s preferred measure of underlying inflation — the trimmed mean — remained sticky, increasing by zero point three percent in the month and registering an annual rate of three point two percent.
This rate continues to sit above the central bank’s two to three percent target band, indicating persistent inflationary pressures across a broad range of services and housing costs, which climbed strongly in November.
The strength of core inflation has reinforced expectations that monetary policy may need to remain restrictive for longer.
Market reaction to the inflation data was mixed.
While the softer headline figure initially eased some concerns over rising prices, investors still see a meaningful probability of an interest rate increase when the Reserve Bank meets in early February, with some pricing in around a one-in-three chance of a move.
Major financial institutions have diverging views on the near-term path for rates, with some forecasting hikes and others expecting the central bank to hold its cash rate at its current level as it awaits more comprehensive quarterly inflation data.
Treasury officials have noted that the November figures offer a nuanced picture: headline inflation’s deceleration is welcome, but underlying price pressures — particularly in housing and services — suggest that inflation is not yet reliably returning to target.
The data add to a complex economic backdrop in which core inflation remains a key focus for policymakers weighing the trade-offs between supporting growth and containing price pressures as the new year unfolds.
New data from the Australian Bureau of Statistics show that the Consumer Price Index rose by three point four percent in the year to November, down from three point eight percent in October, and below economists’ forecasts.
The moderation was driven in part by price declines in clothing, footwear, household furnishings and recreational activities, seasonal discounting and softer electricity price growth.
Despite the headline slowdown, the Reserve Bank of Australia’s preferred measure of underlying inflation — the trimmed mean — remained sticky, increasing by zero point three percent in the month and registering an annual rate of three point two percent.
This rate continues to sit above the central bank’s two to three percent target band, indicating persistent inflationary pressures across a broad range of services and housing costs, which climbed strongly in November.
The strength of core inflation has reinforced expectations that monetary policy may need to remain restrictive for longer.
Market reaction to the inflation data was mixed.
While the softer headline figure initially eased some concerns over rising prices, investors still see a meaningful probability of an interest rate increase when the Reserve Bank meets in early February, with some pricing in around a one-in-three chance of a move.
Major financial institutions have diverging views on the near-term path for rates, with some forecasting hikes and others expecting the central bank to hold its cash rate at its current level as it awaits more comprehensive quarterly inflation data.
Treasury officials have noted that the November figures offer a nuanced picture: headline inflation’s deceleration is welcome, but underlying price pressures — particularly in housing and services — suggest that inflation is not yet reliably returning to target.
The data add to a complex economic backdrop in which core inflation remains a key focus for policymakers weighing the trade-offs between supporting growth and containing price pressures as the new year unfolds.
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