The annual rate of inflation increased in November to 2.3%, up from 2.1% in October, according to new figures from the Australian Bureau of Statistics (ABS).
However, the annual trimmed mean (the rate of inflation once you remove extreme price changes on either side) decreased from 3.5% to 3.2%.
Here’s what you need to know.
Inflation figures
Inflation is the rise in prices of goods and services over time.
The latest ABS figures show prices increased by 2.3% from November 2023 to November 2024. This annual rate is slightly up from the 2.1% annual rate recorded in October.
According to the ABS’ Head of Prices Statistics, Michelle Marquardt, the reason for the slight increase is because of the timing of the government’s electricity rebates, which meant there was a particularly large fall in electricity bills in October.
Trimmed mean
The trimmed mean is also known as the underlying rate of inflation. This measure excludes volatile prices, such as oil affected by global supply chains, to better understand longer-term changes in prices.
The trimmed mean is what the Reserve Bank of Australia (RBA) partly uses to inform its decision about the cash rate.
The RBA’s target range for the trimmed mean is 2-3%. In December, when the RBA kept the cash rate the same, it said the then-rate of 3.5% “remains too high”.
Cash rate
The cash rate is what the RBA charges banks for short-term loans.
We usually refer to changes in the cash rate as the RBA raising interest rates, because the cash rate affects interest rates across the economy, including home loans.
The cash rate has been at 4.35% since November 2023, which is its highest level in about a decade. Higher interest rates make it more expensive to borrow.
The next cash rate announcement is on 18 February.
