Starting from 26 November, Australia will receive a complete monthly inflation report, aligning with most OECD countries. The Australian Bureau of Statistics (ABS) will publish this comprehensive monthly Consumer Price Index (CPI) report, leading to the gradual discontinuation of the quarterly CPI, which the Reserve Bank of Australia (RBA) has used since the 1990s.
The absence of complete monthly data has led to uncertainty in rate decisions. For instance, the May 2025 monthly CPI showed a 2.1% inflation rate, aligning with the RBA’s target of 2–3%, whereas the March 2025 quarterly CPI indicated a 2.4% rate, implying ongoing inflation. This discrepancy impacted the RBA’s unexpected decision to maintain the interest rate at 3.85%.
Introduction Of Comprehensive Monthly CPI
Previously, the monthly CPI only assessed 43 out of 87 expenditure categories. The ABS, with new funding, will now review all 87 categories each month. The monthly report has been undergoing tests since April 2024. RBA Governor Michele Bullock warned against relying heavily on the current monthly data due to its volatility. The quarterly CPI will continue for at least another 18 months, as the RBA requires it for seasonally adjusting short-term monthly data.
We believe the introduction of a complete monthly inflation report on November 26 will inject more frequent, smaller shocks into Australian interest rate markets. Derivative traders should prepare for increased volatility in instruments like ASX 30-Day Interbank Cash Rate Futures around the end of each month. This new high-frequency data point means the market will no longer have to wait three months for a major inflation signal.
The caution from the governor against over-relying on this data is a key signal for us. We anticipate the market may overreact to the first few comprehensive monthly prints, creating opportunities for traders who position against these initial, sharp moves. For example, the latest existing monthly indicator for October 2024 showed annual inflation at 3.4%, and we expect this kind of volatility will define the new series as it finds its footing.
Market Reactions And Strategic Positioning
For at least the next year and a half, we will operate in a dual-data environment where the new report and the established quarterly series could tell conflicting stories. This discrepancy is likely to fuel volatility in the Australian dollar, so we are looking at options markets for signs of traders pricing in larger monthly swings. Historically, similar data transitions in other developed economies have led to periods where short-term market pricing detaches from the central bank’s more measured path.
While the new monthly figure will create noise, the quarterly report remains the anchor for monetary policy until it is phased out. We think the tactical approach is to use the monthly data for short-term trades while basing core positions in Overnight Index Swaps (OIS) on the slower-moving quarterly trend and central bank guidance. Current OIS pricing, which implies the cash rate will remain on hold until at least the middle of next year, reflects this more patient view.
