FX.co ★ Australia Q3 Inflation Rate Hits 5-Quarter High

Australia experienced a significant rise in its annual inflation rate, reaching 3.2% in the third quarter of 2025, up from 2.1% in the previous quarter. This figure is the highest since the second quarter of 2024 and exceeded market expectations of 3.0%. The increase in goods inflation, which hit a five-quarter high of 3.0% compared to 1.1% in the second quarter, was primarily driven by a 23.6% spike in automotive fuel prices and a more rapid rise in electricity costs. Several other sectors also saw heightened price pressures, including food (3.1% up from 3.0%), alcohol and tobacco (5.9% up from 5.7%), clothing (2.4% up from 1.2%), housing (4.7% up from 2.0%), health (4.2% up from 4.1%), and recreation (2.3% up from 1.7%). Transport costs, which had previously declined, rebounded to 0.8% from -2.6%. Inflation for household services remained stable at 1.0%, while it decelerated for insurance and financial services (2.6% down from 3.1%) and education (5.3% down from 5.5%). Meanwhile, services inflation rose to 3.5% from a three-year low of 3.3%, due to increases in certain service sectors. The Reserve Bank of Australia's trimmed mean increased by 3.0% year-on-year, surpassing the consensus estimate of 2.7%, indicating the highest level since the fourth quarter of 2024.