Australia’s month-to-month inflation accelerated to three.0% year-over-year in August, hitting the highest of the RBA‘s goal band and marking the best studying in 13 months.
The consequence got here in barely above economists’ expectations of two.9% and represented a notable acceleration from July’s 2.8% tempo.
Key Takeaways from Australia’s August CPI Report
- Headline inflation hit 3.0%, reaching the higher restrict of the RBA’s 2-3% goal band for the primary time since July 2024
- Core inflation measures diverged – trimmed imply eased to 2.6% (from 2.7%), however CPI excluding risky gadgets jumped to three.4% (from 3.2%)
- Housing and electrical energy drove beneficial properties – housing prices rose 4.5% yearly, with electrical energy surging 24.6% as authorities rebates expired
- Rental progress continued to average – annual lease inflation slowed to three.7%, the weakest tempo since November 2022
Hyperlink to Australia’s Shopper Worth Index (August 2025)
The sharp leap in electrical energy costs dominated the inflation narrative. Annual electrical energy prices surged 24.6%, primarily as a result of households in Queensland, Western Australia, and Tasmania had exhausted their state authorities rebates that have been accessible a yr in the past.
The Australian Bureau of Statistics (ABS) famous that, excluding these rebate results, underlying electrical energy costs rose a extra modest 5.9%.
Merchants pared their Reserve Financial institution of Australia (RBA) price reduce expectations following the discharge, with the likelihood of a September 30 transfer dropping to close zero. November reduce pricing additionally softened from round 70% to 60% as merchants pushed again the timeline for potential easing.
The combined nature of the report – scorching headline however cooling core figures – leaves the RBA able to take care of its wait-and-see strategy, with the return to three.0% inflation lowering any urgency for rapid price cuts.
Market Response
Australian Greenback vs. Main Currencies: 5-min
Overlay of AUD vs. Main Currencies Chart by TradingView
The Australian greenback staged sharp and broad rallies when the hotter-than-expected headline determine hit the markets. AUD/JPY jumped 0.28% inside the first quarter-hour, with strong beneficial properties additionally seen towards USD, CHF, and GBP. Notably, the Aussie maintained these beneficial properties by way of the Asian session regardless of the combined particulars within the report.
Whereas the trimmed imply truly cooled and the electrical energy surge was largely technical, merchants appeared to focus extra on the headline beat and the truth that inflation returned to the highest of the RBA’s goal band.
The forex’s resilience recommended markets have been reassessing the probability of near-term RBA motion, with the three.0% headline print probably giving the central financial institution cowl to take care of its present stance.
The Aussie remains to be hanging out close to its intraday highs towards the majors as London will get able to open.
