Inflation above expectations on new gauge
The ABS released its shiny new monthly inflation gauge for October 2025, which showed headline inflation at 3.8 per cent.
Electricity prices were a main contributor, being a frankly ridiculous 37.1 per cent higher, with the Federal government now under an awful lot of pressure to renew consumer rebates.
The 12-month change in the trimmed mean inflation reading was 3.3 per cent, which was higher than the market forecast of 3.2 per cent.
Housing (with an annual movement of 5.9 per cent) has a been a major contributor to inflation rising back above the target band, with new dwelling prices, rents, and property rates all on the up.
Source: ABS
There's no getting away from the fact that this result has the suspicious evidence of government fingerprints on it, with prices administered and indexed rising by 7.8 per cent, versus 2.8 per cent for market related prices (hat tip Shane Oliver from AMP).
Granted, monetary policy may have a more limited impact on these sectors, while some of the known supply shocks are volatile, and may reverse in due course.
This is a new data series and it may need to be treated with some caution, but there clearly won't be any interest rate cuts for a fair while to come with core inflation now above target, and it's possible we've seen in the final cut in this cycle.
Housing market investors and those with mortgages will be happy to see the value of their debt being inflated away at such a rate - and have evidently benefited from surging rents over the past 5 years - while interest rate settings are also keeping something of a handbrake of dwelling construction.
On the other hand, they may not benefit from any further monetary easing in this cycle.
Housing construction picks up pace
In other news, the value of new house construction picked up sharply in Q3, after a recent lull.
Apartment construction also lifted significantly in the September quarter.
Notably, construction is firing up in south-east Queensland, with some huge towers approved for development on the Gold Coast (including one 390-metre monster apartment tower!).
That said, there is perhaps something of a window for these developments to be delivered by the larger market players, before attention turns to infrastructure projects for the 2032 Olympics.
There's no shortage of infrastructure works in New South Wales, with engineering construction work done lifting to a record $10.3 billion across the quarter in the Premier State.
Nationally, engineering construction work done 'fell' by -5.8 per cent in the September quarter, but this was essentially due to the preceding quarter recording a massive $3.9 billion spike in the Northern Territory - which mostly related to a floating module launched off the Barossa LNG project (and obviously wasn't repeated this quarter).
Overall, there's something of a hand-off happening in the economy, with government spend and hiring no longer taking employment forward as was once the case, but a surge in residential construction may yet pick up the slack.
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