Inflation still rising, sparking rate hike fears

If it feels like the price of everything still seems high, you’re not wrong. The Consumer Price Index (CPI) figures for the September quarter show inflation is continuing to bite. The big question is what will this do to interest rates?

Figures released by the Australian Bureau of Statistics (ABS) show the CPI rose 1.2 per cent for the September quarter – marginally higher than the expected 1.1 per cent – and is up 5.4 per cent for the previous 12 months, down from 6 per cent.

The CPI measures the average change in prices paid by consumers over a period of time for a basket of goods and services.

Michelle Marquardt, head of prices statistics at the ABS, says while the rate of inflation is rising, it is doing so at a slower rate than during the spikes of last year.

“CPI rose 1.2 per cent in the September quarter, higher than the 0.8 per cent rise in the June 2023 quarter. The rise this quarter, however, continued to be lower than those seen throughout 2022,” she says.

“While prices continued to rise for most goods and services, there were some offsetting falls this quarter, including for childcare, vegetables and domestic holiday travel and accommodation.”

The products and services that went up the most during the September quarter were automotive fuel (+7.2 per cent), electricity (+4.2 per cent), rents (+2.2 per cent) and new dwellings purchased by owner occupiers (+1.3 per cent).

Rents still rising

The continuing rise in rents is good news for those who own an investment property, but is obviously not so good for renters – although Ms Marquardt notes the quarter also saw the Commonwealth Rent Assistance rate increase by 15 per cent on top of the twice-yearly indexation.

“This is the largest increase in Commonwealth Rent Assistance for 30 years and, while the increase applied for only part of the quarter, it reduced the overall increase in rents by 0.3 percentage points,” she says.

Energy price pressure

Electricity prices were up 4.2 per cent, due to higher wholesale prices being passed on to customers after annual price reviews in July. 

But the news could have been a lot worse. Power prices were partially offset by the Energy Bill Relief Fund rebates, which were introduced during the quarter.

“Excluding the rebates, electricity prices would have increased 18.6 per cent in the September quarter,” Ms Marquardt says.

Kate Browne, head of research at Compare Club says customers should always be seeking a better deal on their electricity, as rates are constantly changing.

“Electricity prices are one of the biggest drivers of the CPI increase, yet getting a better deal is often quite easy to do,” she says.

“Currently there are deals on the market in some states that are hundreds of dollars less than the reference price so ask your energy provider for a better deal or speak to a competitor as a new customer.”

Food increases slowing

You’ve probably noticed food prices are still going up (+0.6 per cent), but the figures show the rate of increase is the softest quarterly increase for food since September 2021.

The rise was primarily driven by takeaway foods, but was tempered by price reductions for fresh fruits and vegetables.

“Fruit and vegetable prices fell this quarter due to favourable growing conditions. Berries, grapes and salad vegetables such as tomatoes, broccoli and capsicums drove the fall,” Ms Marquardt says.

Treasurer Jim Chalmers said the government and the consumer watchdog were watching food prices to ensure all retailers, including supermarkets, were treating customers fairly.

“When some of their input costs were going up, their prices were going up; we want to see their prices come down when some of their input costs come down on the other side of the peak. We’ve made that clear on multiple occasions,” Dr Chalmers said.

What will this do to interest rates?

New Reserve Bank of Australia (RBA) governor Michele Bullock told a banker’s conference in Sydney earlier this week that the board would “not hesitate” to lift the official interest rate again if inflation continued to rise.

“The board will not hesitate to raise the cash rate further if there is a material upward revision to the outlook for inflation,” she said.

“At the same time, the board is mindful that growth in demand and the rate of inflation have been moderating, and that there are long lags in the transmission of monetary policy.”

Ms Bullock remained tight-lipped about whether the latest CPI figures would mean rates will definitely go up on 7 November, saying the board is still yet to receive detailed inflation forecast numbers.

But Ms Browne says a November rate rise looks more likely than not.

“After today’s rise in CPI it’s looking more likely that we will see another rate rise next month, inflation is a critical gauge closely monitored by the RBA,” she says.

“With it rising 1.2 per cent in the September quarter, the impact is likely to affect the cash rate,”

Have you noticed any changes in your monthly spending? What will a rate rise mean for you? Let us know in the comments section below.

Also read: Why high interest rates are not bad news for everyone

Brad Lockyer
Brad Lockyer
Brad has deep knowledge of retirement income, including Age Pension and other government entitlements, as well as health, money and lifestyle issues facing older Australians. Keen interests in current affairs, politics, sport and entertainment. Digital media professional with more than 10 years experience in the industry.


  1. In the long run, inflation hurts nearly everyone, as prices just continue to rise. Raising interest rates is one weapon to counter this, but it is the only one available to the Reserve Bank. Other options to curb inflation are to reduce government spending, and increase taxation. But that would be unacceptable politically.
    So we will probably continue with the Reserve Bank and the Federal Government moving in opposite directions in the fight against inflation. If they worked together, ignoring the political overtones, then we would more than likely not need such high interest rate hikes.
    Don’t hold your breath!

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