Australian Inflation Slows to 3.4%, Boosting Equities and Easing Rate Hike Expectations

Sydney | EcoPulse24

Australia's annual inflation rate slowed to 3.4% in November 2025, compared to 3.8% in October and below market forecasts of 3.7%. Despite remaining above the Reserve Bank of Australia’s target range of 2–3%, this is the lowest level since August. The slowdown was mainly attributed to a decrease in housing price growth to 5.2% from 5.9% and a drop in electricity inflation to 19.7% from 37.1% following the expiration of government support measures.
Inflation rates also moderated in categories such as alcohol and tobacco (4.3%), clothing (5.1%), furniture (1.3%), health (3.6%), and recreation (2.0%). Transport (2.7%), education (5.4%), and financial services (2.5%) remained stable. In contrast, food inflation accelerated to 3.3% and communications to 1.3%. The trimmed mean inflation eased to 3.2% from 3.3%, with the monthly indicator unchanged.
Since November, Australia has been using a full monthly inflation series as its primary gauge, with data extending to April 2024.

The inflation reading buoyed the stock market, with the S&P/ASX 200 index trading near 8,710 points, up 0.3% on the day. Mining stocks rose 0.7% to record highs on robust commodity prices, with positive performances from BHP and Rio Tinto. Gold shares also benefited from increased hedging flows. Conversely, the energy sector faced headwinds as oil prices declined amid abundant supply and uncertain outlooks.

Analysis
The inflation slowdown has repriced short-term monetary policy risks, offering relief to domestic assets. However, the interest rate path remains contingent on sustained evidence of moderation in upcoming inflation data.