State Street Investment Management APAC economist Krishna Bhimavarapu said the latest Consumer Price Index (CPI) data “carried a sting in the tail for Q3”, as the trimmed mean CPI rose annually for the first time since December 2022, offsetting recent signs of softness in the labour market.

“Today’s CPI data carried a sting in the tail for Q3, as the trimmed mean CPI rose annually for the first time since December 2022,” Mr Bhimavarapu said.

“This more than offsets the impact of the recent rise in unemployment and provides enough justification for the RBA to maintain their outlook.”

He noted that the largest jump in property rates since 2014 was a key contributor to the rise in prices, alongside higher electricity and alcohol and tobacco costs.

“The largest jump in property rates since 2014 is worrying, but under the hood the jump was also led by electricity prices – muddied by subsidies and annual reviews. Alcohol and tobacco prices also contributed but, the drop in insurance premiums is significant and is quite welcome,” Mr Bhimavarapu said.

Despite persistent inflation pressures, Mr Bhimavarapu said the labour market’s weakness could prove more structural, warranting caution.

“Nevertheless, we continue to stress caution, as the increase in unemployment appears more structural—particularly against a challenging global backdrop. For this reason, we continue expecting one rate cut by December,” he said.