Inflation highest since July 2024 – pushed up by electricity bills
Economists remain confident that the latest CPI data points towards a November cash rate cut.
INFLATION rose three per cent in the 12 months to August 2025, according to the latest data from the Australian Bureau of Statistics (ABS).
Michelle Marquardt, ABS head of prices statistics, said: “The 3.0 per cent annual CPI inflation to August was up from 2.8 per cent to July, making this the highest annual inflation rate since July 2024.’
The largest contributors to annual inflation were housing, which was up 4.5 per cent, food and non-alcoholic beverages, which were up 3.0 per cent, and alcohol and tobacco – up 6.0 per cent.
Annual trimmed mean inflation – which is calculated without irregular or one-off events like the impact of the electricity rebates – was 2.6 per cent to August 2025 down from 2.7 per cent to July 2025.
Annual Housing inflation was 4.5 per cent to August, up from 3.6 per cent to July, reflecting increases in electricity costs.
Those rose 24.6 per cent in the 12 months to August.
Ms Marquardt added: “The annual rise in electricity costs is primarily related to households in Queensland, WA and Tasmania having higher out-of-pocket costs in August 2025 than they did in August 2024.
“In August last year, State Government electricity rebates were in place for Queensland ($1000), Western Australia ($400) and Tasmania ($250).
“Over the year, those rebates have been used up and those programs have finished.
“Excluding the impact of the various changes in Commonwealth and state electricity rebates over the last year electricity prices rose 5.9 per cent.”
Although the trimmed mean inflation – the RBA’s preferred measure of underlying inflation – fell to 2.6 per cent in August, it’s not likely to prompt a change in the cash rate when the board meets next week.
Economists still think there is a odds-on cut at the Melbourne Cup Day rate call.
CBA economist Harry Ottley said: “We remain comfortable with our base case for the RBA to hold next week and then cut the cash rate to 3.35 per cent in November.
“That said, today’s data is a reminder that the November cut is not a done deal.”
Stephen Koukoulas – managing director at Market Economics said: “The inflation rate is not standing in the way of further RBA interest rate cuts, even though such a move is unlikely next week. The activity and labour market data suggest it should cut.”
