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While headline inflation eased to 2.8% in the September quarter, the Reserve Bank remains unmoved on interest rates. RBA Governor Michelle Bullock says the drop in the cost of living may be welcome relief for most of us, but the Board’s measure to watch is trimmed mean inflation and that’s still not “sustainably” in the desired target range of 2-3%. It’s not likely to get there until late in 2026, the RBA predicts.

The sharemarket reacted sharply to the Governor’s comments in the last days of a month that had seen several all-time highs. US President-elect Donald Trump’s promise for 25% tariffs on Canadian and Mexican goods also contributed to the billion dollar shares sell-off. Nonetheless, the S&P ASX200 finished November 3.4% higher.

The Australian dollar is also taking a beating from the possibility of both the US tariffs and the RBA’s rates forecast. It hit a seven-month low below 65 US cents near the end of the month.

And, in good news the ANZ-Roy Morgan Consumer Confidence Index, while down slightly has stayed above a mark of 85 points for the sixth week in a row for the first time in two years. Commonwealth Bank projections expect a boost in sales for small businesses thanks to the Black Friday and Cyber Monday sales and the coming festive period.

Interest rates are expected to remain on hold when the Reserve Bank board meets next week despite welcome news on the inflation front. The Consumer Price Index rose just 0.2% in the September quarter and 2.8% for the year, the lowest rate in just over three years. Prices fell slightly for alcohol and tobacco, clothing, housing, health, and financial services. Transport costs also fell for the first time since 2020.

Share prices softened during the past two weeks of October, recorded the worst monthly performance in six months. The S&P/ASX 200 closed slightly down by 0.3% over the month, after again reaching record highs mid-month.

The Australian dollar ended the month at 65.7 US cents after almost hitting 70 US cents just a few weeks ago. Investors were reacting to the weaker than expected Australian retail sales and stronger US unemployment and retail sales figures.

Iron ore has hit a one-month low at USD104.08 after the heady highs in January of almost USD 145 in January. All eyes are on meetings in China next week about expanding its stimulus measures.

Global stock markets – including the ASX – largely stabilised by the end of August after a turbulent month.

It was a rocky start when markets everywhere fell after news of high unemployment figures in the US and an interest rate move by Japan’s central bank. Despite the dramas, the S&P/ASX 200 closed 1.28% higher for the month marking a gain of just over 10% for the 12 months to date.

A slight drop in inflation figures – down to 3.5% in July from 3.8% the previous month – had investors checking the Reserve Bank’s reaction but most economists agree there’s no chance of an interest rate cut this year. The RBA’s not forecasting inflation to get to its preferred levels until late 2026 or early 2027.

While the cost of living has dropped ever so slightly (and partly due to $300 federal government rebates on electricity bills), wages have risen. The Australian Bureau of Statistics reports that wages rose by 4.1% in the year to June. It means that wages are now keeping up with the cost of living.

The good news from the markets and inflation data contributed to a small upswing in consumer confidence although there’s still much ground to recover after the losses caused by Covid-19.

Market watchers, investors and mortgage holders, who’d been anxiously awaiting the release of the latest inflation data at the end of July, could neither jump for joy nor collapse in despair.

The best that could be said about the figures was that they were not as bad as they could have been. It remains to be seen how the Reserve Bank board will view inflation’s modest increase when it meets on August 5 and whether it decides on an interest rate rise to counter it. The Australian Bureau of Statistics says prices rose 1% in the June quarter and 3.8% annually.

Retail sales continue to splutter along with the latest data showing a 0.5% increase in sales in June thanks to the sales but over the quarter, retail sales volumes fell 0.3% for the sixth time in the past seven quarters. Meanwhile, building approvals fell 6.5% in June after a 5.7% rise the previous month.

The ASX S&P 200 index finished the month strongly with an increase of around 4%, riding out a mid-month plunge. But the currency didn’t fare quite as well, falling below US65 cents for the first time in almost three months. In the US, the S&P 500 finished the month almost where it began after a big mid-month upward spike then fall but, for the year to date, it’s recorded an increase of almost 15%.

Technology stocks have driven Australian shares, and global markets, to new highs in the last 12 months. The S&P/ASX 200 finished the financial year 7.8% higher, slightly less than the previous year. Technology stocks gained 28% during the year.

In the US, the S&P 500 index rose 14% in the first six months of 2024 in one of the strongest performances since the dotcom bubble of the 1990s. Tech stocks were behind much of the gain, in particular AI chipmaker Nvidia, which overtook Microsoft and Apple as the world’s most valuable public company last month.

An interest rate cut is widely expected in September in the US but in Australia, many commentators predict another rate increase before the end of the year to help tame inflation. The RBA left interest rates unchanged at 4.35% at its June meeting but news that annual CPI was up by 4.0% in May compared with 3.6% in April will give the Bank cause for concern.

The Australian dollar ended the financial year almost where it began at just under US67 cents, after 12 months of volatility with highs of almost US69 cents and lows under US63 cents.

A slight increase in the Consumer Price Index last month, to 3.6% from 3.5% in March, has led some economists to predict we’ll be waiting longer for the first official interest rate cuts, perhaps until the end of next year, with little to no chance of a rate rise in the meantime. While inflation has been relatively stable over the past five months, this is the second monthly increase in a row. The biggest price increases were in the housing, food and beverages, alcohol and tobacco, and transport sectors. Retail spending continues to be weak. The 0.1% increase in turnover in April wasn’t enough to make up for a 0.4% drop in March.

The higher-than-expected inflation figures saw Australian share prices take a tumble after reaching a welcome high mid-month. The ASX200 finished the month on a positive note, slightly higher for the month of May. In the US, troubles in the tech sector and a global bond sell-off saw small losses on the Dow, the Nasdaq and the S&P 500 while European markets in London, France and Germany also finished the month on a low.

A strong US dollar along with the uptick in Australia’s inflation data saw the Aussie dollar fall from a mid-month peak of just over US67 cents.

The cost of living continues to bite with consumers keeping their wallets firmly closed. Retail sales fell 0.4% in March after getting a boost from the ‘Taylor Swift effect’ the previous month and prices continue to rise with a CPI increase in the March quarter to 3.6% annually. Education, health, housing and food recorded the biggest price increases for the quarter.

The markets have been subdued too with the prospect of further interest rate rises both in Australia and the US. The S&P/ASX 200 was down by about 2.5% for April. Some economists are predicting that we may not see the first cuts in interest rates until November. Mining stocks have been generally buoyant as commodity prices continue to surge while the energy and retail sectors have struggled.

The Australian dollar is back from the doldrums mid-month to end April at just over US65c. But with a strengthening US dollar, economists are rethinking their six-month outlooks for the Aussie with predictions now of between US65c and US69c. The surprise player in our currency’s fortunes has been the ailing Japanese yen. Its weakness has been our gain with the Aussie ending April above 100 yen, its highest level since 2014.