Inflation jumps to 3.2%, dashing hopes of a Melbourne Cup day rate cut for homeowners
Inflation has jumped to 3.2% in the year to September, from 2.1% in June, as waning government subsidies feed through to a spike in household power bills.Any lingering chance of a rate cut next Tuesday – or potentially this year – was squashed after the Australian Bureau of Statistics figures also confirmed the first rise in underlying inflation in nearly three years.Jonathan Kearns, the chief economist at Challenger, said “the path for inflation returning to the RBA’s target of 2.
5% was never going to be smooth, but this is a big bump”.The Reserve Bank’s preferred trimmed mean measure – which removes the impact of large, temporary price moves – climbed by 1% in the three months to September and far ahead of the RBA’s predicted rate of 0.6%.That left inflation on this trimmed mean measure at 3% in the year, against 2.7% in June.
Underlying inflation has not accelerated since late 2022, and the major reversal of a multi-year trend of easing price pressures will trigger alarm bells at the central bank before its two-day monetary policy board meeting on Monday.Economists were quick to rule out any chance of a fourth rate cut on Tuesday, and flagged any further mortgage relief would likely be pushed back deeper into 2026.Brendan Rynne, KPMG’s chief economist, said resurgent inflation “provides the justification for the RBA to sit on its hands”.Sign up: AU Breaking News emailBut Rynne said more rate cuts were still “absolutely needed” to kickstart the economy as government support wanes.“We knew there was going to be an uptick in inflation once electricity rebates were wound back but unfortunately today’s spike is much higher than any of us anticipated,” he said.
The ABS said the main contributor to the headline annual inflation rate was a 24% rise in electricity prices.This was “primarily related to households in Queensland, Western Australia and Tasmania having higher out-of-pocket costs” than during the same period last year, the ABS said.Sign up to Breaking News AustraliaGet the most important news as it breaksafter newsletter promotionPetrol prices fell but there was plenty of evidence that the cost of living was continuing to bite.Grocery items were 3.1% higher in the year to September, including a 15% rise in coffee, tea and cocoa prices due to issues with overseas suppliers of coffee beans.
Michele Bullock, the RBA’s governor, this week made it clear that a quarterly rise in underlying inflation of 0.9% would be a “material miss”, signalling the monetary policy board would not be prepared to deliver a fourth rate cut next week.While Australians will feel the bite of higher electricity prices, what has been more concerning for the central bank is the unexpected and unwelcome lift in underlying inflation.Bullock this week made it clear that the central bank was, for now, more worried about the prospect of resurgent inflation than a recent jump in unemployment.The governor said the labour market was not about to “fall off a cliff” and that the jobless measure was “still pretty low”.
While the probability of a rate cut in 2025 now appears vanishingly slim, another bad monthly jobs report would make December’s rates decision “much more complicated”, said Cherelle Murphy, the chief economist of EY.
EU carmakers ‘days away’ from halting work as chip war with China escalates
Carmakers in the EU are “days away” from closing production lines, the industry has warned, as a crisis over computer chip supplies from China escalates.The European Automobile Manufacturers’ Association (ACEA) issued an urgent warning on Wednesday saying its members, which include BMW, Fiat, Peugeot and Volkswagen, were now working on “reserve stocks but supplies are dwindling”.“Assembly line stoppages might only be days away. We urge all involved to redouble their efforts to find a diplomatic way out of this critical situation,” said its director general, Sigrid de Vries.Another ACEA member, Mercedes, is now searching globally for alternative sources of the crucial semiconductors, according to its chief executive, Ola Källenius
Wall Street hits new highs as Nvidia becomes world’s first $5tn company – as it happened
Wall Street’s main indices hit new record highs, as Nvidia become the first company ever to surpass a $5tn stock market valuation.This comes amid a wave of big tech earnings reports, and as investors are waiting for the US Federal Reserve’s interest rate decision later today – it is widely expected to cut rates by a quarter point to 4%.Art Hogan, chief market strategist at B.Riley Wealth Management, told Reuters:While the $5tn milestone seems unfathomable in a historic context, it comes in the wake of a company that has managed to outperform on all metrics.Nvidia shares rose as much as 5% and are now up 4
Apple hits $4tn market value as new iPhone models revitalize sales
Apple topped $4tn (£3tn) in market value for the first time on Tuesday, joining Microsoft and Nvidia as the third company in history to hit the milestone, thanks to strong demand for its latest iPhones.Apple’s share price has increased by more than 50% since a low point in April, thanks to the debut of its latest products.“The iPhone accounts for over half of Apple’s profit and revenue, and the more phones they can get into the hands of people, the more they can drive people into their ecosystem,” said Chris Zaccarelli, the chief investment officer for Northlight Asset Management, before the milestone was reached.Apple’s shares had struggled earlier this year on concerns over tough competition in China and how it would cope with high US tariffs on Asian economies such as China and India, its main manufacturing hubs.However, the latest smartphones, the iPhone 17 lineup, have won back customers from Beijing to Moscow, while the company has swallowed tariff costs instead of passing them on to consumers
OpenAI completes conversion to for-profit business after lengthy legal saga
OpenAI said on Tuesday it had converted its main business into a for-profit corporation, the conclusion of a lengthy and fraught legal saga.A crucial regulator, Kathy Jennings, the Delaware attorney general, said she approved the plan for the startup, which began as a non-profit in 2015, to change to a public benefit corporation, a type of for-profit entity that expresses commitment to bettering society.The company also said it had reorganized its ownership structure and signed a new agreement with its longtime backer Microsoft that gives the software giant a roughly 27% stake in OpenAI’s new for-profit corporation, but changes some of the details of their close partnership. OpenAI was valued at $500bn under the terms of the deal, making Microsoft’s stake worth more than $100bn.The restructuring paves the way for the ChatGPT maker to more easily raise capital and profit off its artificial intelligence technology, even as it remains technically under the control of its own original non-profit entity
Dingwall backed to plot course through the midfield maze for England
Even Steve Borthwick admits that picking his team to face Australia on Saturday was tricky. And even after he had made his mind up, there was a training ground snapshot which underlined the slim margins involved. “There was a piece of play where the skill showed by the team not starting was absolutely incredible,” said Borthwick. “I couldn’t praise them highly enough for the way they tested the team that is starting.”Which neatly sums up England’s intensifying backline debate
South Africa beat England by 125 runs: Women’s Cricket World Cup semi-final – as it happened
That’s all for today. Thanks for your company and emails – we’ll be back in the morning for the second semi-final between India and Australia. Goodnight!Very special. Losing to England in the semis of the last two [ODI] World Cups really hurt so just really pleased to get the win tonight.[Did the 69 all out feature in your mind before the game?] It did a little bit! Same opposition, same venue; your mind automatically goes back to that game
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