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CPI data puts a pin in any hope of a September rate cut
24 Sept 2025
Headline inflation has risen to an annual rate of 3.0% in August, up from 2.8% in the previous month, to the highest level since July 2024.
The biggest annual rise was electricity, up 24.6%, however, this was largely as a result of last year’s super-sized rebates in Queensland, Western Australia and Tasmania. Looking at the monthly change, costs fell 6.3% in August due to a delay in NSW and ACT’s most recent federal rebates, according to the ABS.
Trimmed mean inflation slowed to an annual rate of 2.6% in August, down from 2.7% in July, while CPI excluding volatile items and holiday travel rose from an annual rate of 3.2% in July to 3.4% in August.
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| Monthly CPI Indicator – annual movement | ||
|---|---|---|
| Month | CPI indicator | Annual trimmed mean |
| January 2025 | 2.5% | 2.8% |
| February 2025 | 2.4% | 2.7% |
| March 2025 | 2.4% | 2.7% |
| April 2025 | 2.4% | 2.8% |
| May 2025 | 2.1% | 2.4% |
| June 2025 | 1.9% | 2.1% |
| July 2025 | 2.8% | 2.7% |
| August 2025 | 3.0% | 2.6% |
Source: ABS Monthly Consumer Price Index Indicator.
What does this mean for the RBA meeting next Tuesday?
Today’s CPI results certainly don’t further the case for a cash rate cut next week, however, this data is unlikely to cause the central bank to hit the panic button either. While the monthly data can provide some insight into what’s happening with prices, it doesn’t yet measure a full basket of goods each month and can be volatile.
Knowing the Board’s strong preference for quarterly inflation data, it will likely wait until the 3-4 November meeting before cutting the cash rate again, provided the September quarterly CPI results, due out on 29 October, remain on track, which is by no means a given.
Certainly, all four big bank economic teams expect the next cut to come in November.
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| Current big four bank cash rate forecasts | |||
|---|---|---|---|
| Bank | Next cut | Total cuts to come | Cash rate at end of cuts |
| CBA | 4 Nov | 1 | 3.35% |
| Westpac | 4 Nov | 3 | 2.85% |
| NAB | 4 Nov | 2 | 3.10% |
| ANZ | 4 Nov | 1 | 3.35% |
For a borrower with a $600,000 mortgage at the start of the cuts, a rate cut in November would see their minimum monthly repayments drop by a further $87.
However, with three cuts already in effect, the total drop across the February, May, August as well as a November cut would be $359.
This assumes banks pass this next cut on in full to their variable customers.
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| Impact of RBA rate cuts on minimum monthly repayments | ||
|---|---|---|
| Loan size at start of cuts | Cut in November | Across all 4 cuts (Feb, May, Aug, Nov) |
| $500,000 | -$73 | -$299 |
| $600,000 | -$87 | -$359 |
| $750,000 | -$109 | -$449 |
| $1m | -$145 | -$598 |
Source: Canstar. Notes: based on an owner-occupier paying principal and interest with 25 years remaining in Feb 2025 at the RBA average existing customer variable rate. Calculations assume the banks pass on each cut in full to existing variable customers the month after.
RBA in no rush for next rate cut
Canstar’s data insights director, Sally Tindall says, “This latest set of numbers has put a pin in what little hope there was for a September rate cut.”
“The RBA will look beyond the wild swings in electricity costs driven by state and federal rebates, but it won’t gloss over the recent price hikes, which are likely to be exacerbated when the rebates start drying up over the next few months.
“Inflation has got the wobbles and while the RBA gives little weight to this monthly dataset, it’s likely to push the Board to hit the pause button for now. With the economy picking up pace and unemployment still at a relatively low 4.2 per cent, there’s no urgency to cut.
“The Board’s dual mandate is to keep prices in check and Australians in jobs, with the latter gaining prominence in their decision-making. Keeping the cash rate on hold gives the RBA the chance to review one more round of Labour Force data to better understand how the jobs market is holding up.
“A hold next week doesn’t mean we’ve reached the end of the cutting cycle. There’s still a chance the RBA will cut rates in November, if inflation plays ball. This, however, is by no means a given.
“A cut in November, if it materialises, would shave another $87 off the monthly repayments of a $600,000 loan. That might not sound like much in isolation, but across what would then be four cuts this year, the savings add up to almost $360 a month.
“The one rate cut you can bank on is the one you negotiate yourself, either by switching to a lower rate lender or haggling with your current bank.
“If you’re an owner-occupier paying down your debt, know that the average variable rate is currently sitting at around 5.53 per cent. If you’re not under this mark, ideally well under, then it’s time to ask yourself why.”
This article was reviewed by our Finance Editor Jessica Pridmore before it was updated, as part of our fact-checking process.
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