RBA Weighted Median CPI YoY: October 2025 Analysis and Macro Outlook
The Reserve Bank of Australia’s (RBA) latest Weighted Median Consumer Price Index (CPI) reading for October 2025 showed a slight uptick to 2.80% year-over-year (YoY), surpassing the market estimate of 2.70% and edging above the previous 2.70% print. This subtle rise signals a persistent inflationary pulse amid evolving economic conditions. Drawing from the Sigmanomics database, this report contextualizes the current figure against historical trends, explores core macroeconomic indicators, and assesses the broader implications for monetary policy, fiscal stance, and financial markets.
Table of Contents
Big-Picture Snapshot
The October 2025 RBA Weighted Median CPI YoY reading of 2.80% marks a modest increase from the 2.70% recorded in July 2025. This figure continues the downward trajectory from the peak inflation levels seen in mid-2023, when the index reached 5.50%. Over the past 15 months, inflation has steadily declined, reflecting the cumulative impact of monetary tightening and easing supply chain pressures.
Drivers this month
- Shelter costs contributed 0.15 percentage points (pp), reflecting ongoing housing market pressures.
- Energy prices added 0.10 pp, influenced by global oil price volatility.
- Food inflation remained steady, contributing 0.05 pp.
- Used car prices slightly eased, subtracting -0.02 pp.
Policy pulse
The 2.80% reading remains above the RBA’s 2–3% inflation target band, suggesting that inflationary pressures have not fully normalized. The RBA’s recent pause in rate hikes may be tested if inflation proves sticky, though the modest rise tempers urgency for aggressive tightening.
Market lens
Immediate reaction: The Australian dollar (AUD/USD) strengthened by 0.30% within the first hour post-release, while 2-year government bond yields rose 5 basis points, reflecting increased expectations of a prolonged tightening cycle.
Foundational Indicators
Alongside the Weighted Median CPI, other core macroeconomic indicators provide essential context. Australia’s unemployment rate held steady at 3.80%, near historic lows, supporting wage growth pressures. Retail sales data for September showed a 0.40% month-over-month increase, indicating resilient consumer demand despite tighter financial conditions. The Australian dollar’s trade-weighted index appreciated 1.20% over the past quarter, buoyed by commodity exports and relative monetary policy divergence.
Monetary policy & financial conditions
The RBA’s cash rate remains at 4.10%, unchanged since August 2025. Financial conditions have tightened moderately, with mortgage rates rising by approximately 40 basis points since mid-year. Credit growth slowed to 3.50% YoY, reflecting cautious borrowing amid inflation concerns. The Weighted Median CPI’s slight increase may prompt the RBA to maintain a cautious stance, balancing inflation control with growth risks.
Fiscal policy & government budget
The Australian government’s 2025–26 budget projects a deficit of 1.80% of GDP, slightly wider than the previous year’s 1.50%. Fiscal stimulus remains modest, focused on infrastructure and energy transition investments. The restrained fiscal approach limits inflationary pressures but also reduces buffers against external shocks.
Chart Dynamics
Key observations include a narrowing gap between headline and core inflation measures, signaling less volatility in volatile components like food and energy. The Weighted Median CPI’s resilience relative to trimmed mean measures suggests persistent underlying price pressures in shelter and services sectors.
This chart highlights a trend of decelerating inflation that is stabilizing just above the RBA’s target. The persistence of shelter and energy costs suggests inflation may remain sticky, requiring ongoing vigilance from policymakers.
Market lens
Immediate reaction: Australian 2-year bond yields rose 5 basis points, reflecting increased market pricing for sustained monetary tightening. The AUD/USD pair gained 0.30%, signaling confidence in Australia’s economic resilience amid inflation data.
Forward Outlook
Looking ahead, inflation dynamics in Australia face several competing forces. On the upside, ongoing wage growth and shelter cost inflation could sustain headline inflation above 2.50% through mid-2026. Conversely, easing global commodity prices and a stronger AUD may exert downward pressure.
Bullish scenario (20% probability)
- Inflation falls below 2.50% by Q2 2026, allowing the RBA to cut rates by 50 basis points.
- Consumer spending remains robust, supporting GDP growth above 3%.
- Global commodity prices stabilize, easing input cost pressures.
Base scenario (60% probability)
- Inflation hovers between 2.70% and 3.00% through 2026, prompting a steady RBA policy stance.
- Moderate wage growth and fiscal prudence keep inflation contained.
- Financial conditions remain tight but manageable.
Bearish scenario (20% probability)
- Inflation accelerates above 3.50% due to wage-price spirals and supply shocks.
- RBA resumes rate hikes, risking economic slowdown.
- Global geopolitical tensions disrupt commodity markets, increasing volatility.
Overall, the RBA Weighted Median CPI’s slight rise signals that inflation remains a key focus. Policymakers will likely maintain a cautious approach, balancing inflation control with growth and employment objectives.
Closing Thoughts
The October 2025 RBA Weighted Median CPI YoY reading of 2.80% underscores a gradual but incomplete disinflation process. While inflation has eased significantly from mid-2023’s highs, persistent shelter and energy costs keep inflation above the RBA’s preferred target range. Monetary policy is expected to remain on hold in the near term but ready to adjust if inflationary pressures intensify.
External risks, including geopolitical tensions and commodity price volatility, could disrupt the inflation outlook. Meanwhile, fiscal discipline and resilient labor markets provide some stability. Financial markets have priced in a cautious RBA, with bond yields and the AUD reflecting a balanced view of risks.
Long-run structural trends, such as demographic shifts and technological adoption, will continue to shape inflation dynamics beyond the immediate horizon. Investors and policymakers should monitor these evolving factors closely to navigate the complex macroeconomic landscape.
Key Markets Likely to React to RBA Weighted Median CPI YoY
The RBA Weighted Median CPI YoY is a critical gauge of inflation trends in Australia, influencing monetary policy and market sentiment. Several tradable assets historically track this indicator closely, reflecting their sensitivity to inflation and interest rate expectations.
- AUD: The Australian dollar typically strengthens on higher-than-expected inflation, as it signals potential rate hikes.
- ASX: Australian equities respond to inflation data through sector rotation and earnings outlook adjustments.
- AUDUSD: This currency pair reacts swiftly to inflation surprises, reflecting shifts in monetary policy expectations.
- BTCUSD: Bitcoin often moves inversely to inflation fears, acting as a speculative hedge.
- NAB: National Australia Bank’s stock price is sensitive to interest rate changes driven by inflation data.
Extras: Inflation vs. AUDUSD Since 2020
Since 2020, the RBA Weighted Median CPI YoY and the AUDUSD exchange rate have shown a positive correlation during inflation surges. For example, the 2023 inflation peak at 5.50% coincided with AUDUSD rising above 0.75, reflecting market expectations of aggressive RBA tightening. Conversely, periods of easing inflation saw AUDUSD weaken, illustrating the currency’s sensitivity to inflation-driven monetary policy shifts.
| Year | Weighted Median CPI YoY (%) | AUDUSD Average |
|---|---|---|
| 2020 | 1.50 | 0.70 |
| 2023 | 5.50 | 0.76 |
| 2025 (Oct) | 2.80 | 0.72 |
FAQ
- What is the RBA Weighted Median CPI YoY?
- The RBA Weighted Median CPI YoY measures core inflation in Australia, excluding volatile items, providing a clearer view of underlying price trends.
- How does the Weighted Median CPI affect monetary policy?
- The RBA uses this indicator to gauge inflation pressures and guide interest rate decisions to maintain price stability.
- Why is the Weighted Median CPI preferred over headline CPI?
- It filters out extreme price movements, offering a more stable and reliable inflation measure for policy analysis.
Key Takeaway
The October 2025 Weighted Median CPI YoY reading of 2.80% signals persistent inflation just above target, suggesting the RBA will maintain a cautious, data-dependent policy stance amid evolving risks.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.









The October 2025 Weighted Median CPI YoY at 2.80% compares to 2.70% in July 2025 and a 12-month average of approximately 3.40%. This marks a clear deceleration from the 5.50% peak in July 2023, illustrating the gradual easing of inflationary pressures over the past 15 months.
Notably, the inflation trajectory has flattened in recent quarters, with the index hovering near the lower bound of the RBA’s target range. The chart reveals a steady decline from early 2024’s 4.40% readings, underscoring the effectiveness of monetary tightening and supply normalization.