November inflation rises to 2.3% amid speculation over pre-election interest rate cut from RBA | Australian economy

The monthly inflation rate rose to 2.3% in November, according to the latest figures from the Australian Bureau of Statistics.

The underlying inflation rate – the Reserve Bank’s preferred measure for prices – has declined but remains above the bank’s target band, casting doubt over the prospect of a February interest rate cut.

The consumer price index for the year to November is the first snapshot of economic data in an election year in which prices, cost-of-living and interest rates will be defining issues.

After the headline inflation rate held steady at 2.1% in October, economists had predicted a slight uptick in November, although the figure had been expected to remain well within the Reserve Bank’s 2% to 3% target band.

The RBA is closely watching the underlying inflation rate as it weighs up a potential rate cut at February’s board meeting.

The underlying inflation rate – which is known as the trimmed mean and excludes volatile price changes – fell from 3.5% in October to 3.2% in November.

The RBA has held the cash rate steady at 4.35% for more than a year as it looks for proof that inflation is tracking to return to the target band.

The treasurer, Jim Chalmers, said the figures showed the “very substantial and sustained” progress in containing inflation, which peaked at 8.2% in December 2022.

Electricity prices were down 21.5% compared with 12 months ago, although the fall was not as steep as the 35.6% drop recorded in October.

Michelle Marquardt, the ABS’s head of prices statistics, said the discrepancy – which contributed to the rise in headline inflation – was due to most households receiving one government energy rebate in November, rather than the two they received in October.

Chalmers said electricity prices would have fallen just 1.7% without the rebates, which were rolled out to all households.

“Even with this substantial progress we know people are still under pressure, and that’s why our cost of living help is so important,” he said.

“Today’s numbers show our policies are playing a helpful role in the inflation fight.”

The Australian Council of Trade Unions seized on the latest figures as further evidence of a “clear pathway” for the RBA to cut rates.

“The RBA needs to stop sitting on their hands and start cutting interest rates from February because household budgets will take months to repair,” said the ACTU’s president, Michele O’Neil.