Headlines

Australia Inflation Hits 3.8%, Highest in 7 Months

Is this a temporary spike, or a crushing consequence of Labor’s spending policies?

Published NOV 26 2025

Australia Inflation Hits 3.8%, Highest in 7 Months

Story

Above: A collection of Australian $50, $20, $10 and $5 banknotes, as well as dollar coins, arranged for a photo in Newcastle, Australia, on March 25, 2025. Image credit: Roni Bintang/Getty Images

The Facts

Australia’s consumer price index rose 3.8% year-on-year in October, marking the highest inflation rate in seven months and exceeding economists’ median forecasts of 3.6%, according to the Australian Bureau of Statistics (ABS).
Halifax
CNBC
Trading Economics
The Daily Telegraph
ABS figures published on Wednesday revealed that a 5.9% year-on-year rise in the cost of housing was the most significant contributor, driven by a 37.1% rise in electricity costs, a 4.2% rise in rents and a 7.1% increase in water and sewage prices.
Australian Bureau of Statistics
Other factors included a 5.4% annual rise in clothing and footwear prices, due to increasing jewelry costs associated with higher gold and silver valuations, as well as a 3.2% increase in the cost of recreation and culture in the 12 months to October.
Australian Bureau of Statistics
Food and non-alcoholic beverage prices also rose 3.2% annually, with meat and seafood costs increasing 3.8% due to strong global demand for Australian red meat. The cost of eating out and takeaways, on the other hand, remained elevated at 3.6%.
Australian Bureau of Statistics
The trimmed mean measure of underlying inflation, meanwhile, which excludes volatile price movements, increased by 0.1 percentage points from 3.2% in the 12 months to September to 3.3% year-on-year in October.
Australian Bureau of Statistics
Daily Mail
In response to the development, financial markets reduced their expectations that the Reserve Bank of Australia would cut interest rates in May 2026 to 8%, while increasing the probability of a rate hike to 32% by the end of the year, weeks after the Reserve Bank chose to hold the cash rate at 3.6%.
Reuters
FXStreet
Reserve Bank of Australia

Sources Split

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The Spin

Australian Labor Party narrative

While Labor is not pleased with current inflation levels, it is worth noting that inflation remains manageable and far below the peak rates suffered under the Liberals. The increase was primarily due to temporary spikes from state energy rebates and other short-term factors. Despite this, Labor will continue to support families with the cost-of-living cutting measures they need.

Jim Chalmers on X

Liberal/National Coalition narrative

Labor’s reckless spending spree has pushed inflation beyond the Reserve Bank’s target, crushing hopes for any further interest rate cuts. As government expenditure outpaces economic growth, it drives up grocery bills, insurance, electricity bills and housing prices, all while mortgage holders pay AU$1,800 more every month than they did when the Liberals left power.