An improved Australian inflation report in November saw both annual headline and core CPI ease after rising in the prior month. Headline CPI slowed from 3.8% to 3.4%, printing below the 3.6% consensus figure, while trimmed mean or core CPI softened from 3.3% to 3.2%, as expected. Black Friday sales and holiday travel were key contributors to the softer inflation outcomes. The upside risks the RBA has been wary of in the final quarter of 2025 in light of its year-end forecasts for headline CPI of 3.3% and 3.2% for the trimmed mean do not appear to be materialising. The RBA's next rates decision is set for February 3, a meeting at which markets see the odds of a rate hike as unlikely at around a 1 in 3 chance.
Source: ABS
For the second month in succession, the monthly change in headline CPI was 0%. In October, base effects lifted the annual rate from 3.6% to 3.8% (headline CPI was -0.2% in October 2024), but in November they drove a decline from 3.8% to 3.4%, after the 0.4% rise from 12 months earlier fell out of the calculation. This highlights the volatility in the monthly indicator and how judgments can swing. The RBA has therefore said its focus remains on the quarterly figures that are due later this month. The more stable trimmed mean came in at 0.3% month-on-month, also the same as in October to leave the annual pace running a little above the top of the 2-3% target band.
The key insights in today's report were around the effect of the Black Friday sales. Compared to 2024, clothing garments saw a larger discounting effect in 2025 with prices falling by 2.3% in the month (vs 1% in 2024). This was also the case for footwear and furniture, those items down 5.5% and 4.6% respectively in November 2025 to outpace the falls seen in 2024. Accessories were the outlier with prices down by a smaller amount in the 2025 sales (-4.1%) compared to 2024 (-7%).
The other main driver weighing on headline inflation in November was holiday travel. That came after strong demand during September and October associated with the AFL and NRL finals and school holidays.
Source: ABS
