Updated 26 November 2025
The Consumer Price Index (CPI) increased to 3.8% p.a. in the October 2025; headline inflation has been outside the RBA's target range for three consecutive months.
Australia's inflation picked up pace in October, surpassing forecasts and reaching its fastest growth in seven months. The consumer price index rose 3.8% year-on-year, marking the sharpest increase since April.
The RBA forecast CPI to rise to 3.7% by the June quarter 2026, before easing throughout 2026-2027. Treasury forecasts for the same period are lower.
The Trimmed Mean Inflation (TMI), which offers a better reading of underlying inflation by excluding volatile items, was 3.3% in October.
The Producer Price Index (PPI) – a measure of industrial prices – increased to 3.5% in the September quarter.
Key contributors to rising prices in the October were housing (+5.9%), food and non-alcoholic beverages (+3.2%) and recreation and culture (+3.2%). The increase in housing for this quarter was due to electricity, rents and new dwellings. Electricity costs jumped in October, driven by the expiry of state rebates and timing of Commonwealth relief payments.
Annual goods inflation was 3.8% in October up from 3.7% in September, largely driven by soaring electricity costs (+37.1%).
Annual services inflation rose to 3.9% in October from 3.5% in September, led by higher costs of rents, medical and hospital services and domestic travel costs.
The Consumer Price Index (CPI) measures changes in the price of a ‘basket’ of goods and services which account for a high proportion of expenditure by metropolitan households. Comprehensive CPI data is published by the Australian Bureau of Statistics quarterly, while a reduced price survey is conducted every month to supplement the quarterly data.
The Quarterly CPI measure is considered the more reliable indicator of inflation, as it measures all consumer prices. The monthly CPI measure is less accurate, but provides more timely insights on price changes that complement the quarterly release.
The Producer Price Index (PPI) measures changes in the price of industrial goods as they are produced. Some products – for example food – are measured in both the CPI and PPI indicators. PPI measures the price obtained by the producer, while CPI measures the price paid by the final consumer.
For more information from the ABS (including advice on using the CPI in contracts) see: https://www.abs.gov.au/statistics/detailed-methodology-information/information-papers/use-price-indexes-contracts
Australian Industry Group research and economics team
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