November 2025

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Australia’s economy remained under pressure in October with a surprise bump in inflation, dampening hopes of a rate cut and prompting some economists to predict the next move in interest rates may be an increase.

Headline CPI rose to 3.2% in the September quarter, up from 2.1% in June, the highest quarterly rise in more than two years.

News of the higher-than-expected inflation numbers was followed by the biggest daily fall in the Australian share market in two months. Wall Street ended the month subdued with mixed results over concerns about no further rate cuts this year but optimism about US-China relations after a positive meeting between the leaders.

The lift in inflation appears to have rattled consumers. The Westpac–Melbourne Institute Consumer Sentiment Index fell 3.5% in October, adding up to a 6.5% drop in the past two months after gains between May and August when rate cuts were giving a boost.

The Aussie dollar strengthened by the end of the month, closing at US65.4c, making up some of the lost ground of the previous fortnight.

Unemployment rose to 4.5% in September, the highest in nearly four years.