Starting from November 26, Australia will begin releasing a complete monthly inflation report, joining most OECD countries. The Australian Bureau of Statistics (ABS) will publish this detailed monthly Consumer Price Index (CPI) report, which will gradually replace the quarterly CPI that the Reserve Bank of Australia (RBA) has utilized since the 1990s. The lack of full monthly data has created uncertainty in making rate decisions. For example, the May 2025 monthly CPI reported a 2.1% inflation rate, aligning with the RBA’s goal of 2–3%. In contrast, the March 2025 quarterly CPI showed a rate of 2.4%, suggesting ongoing inflation. This difference influenced the RBA’s unexpected choice to keep the interest rate at 3.85%.

Introduction Of Comprehensive Monthly CPI

Previously, the monthly CPI covered only 43 out of 87 spending categories. With new funding, the ABS will now assess all 87 categories each month. Testing for the monthly report has been underway since April 2024. RBA Governor Michele Bullock cautioned against relying too heavily on the preliminary monthly data due to its unpredictability. The quarterly CPI will still be available for at least another 18 months, as the RBA needs it to seasonally adjust the new monthly data. We believe that the launch of a complete monthly inflation report on November 26 will introduce more frequent fluctuations in Australian interest rate markets. Traders should prepare for greater volatility in instruments like ASX 30-Day Interbank Cash Rate Futures at the end of each month. This high-frequency data means the market will no longer wait three months to receive a significant inflation update. Governor Bullock’s warning about over-relying on this data sends an important message. We expect traders may overreact to the initial comprehensive monthly reports, creating opportunities for those who position themselves against these sharp changes. For instance, the latest monthly indicator for October 2024 indicated annual inflation at 3.4%, and we foresee similar volatility as the new series settles into place.

Market Reactions And Strategic Positioning

For at least the next 18 months, we will experience a dual-data scenario where the new monthly report and the established quarterly series may not agree. This discrepancy could increase volatility in the Australian dollar, prompting us to monitor the options market for signs that traders are anticipating larger monthly swings. Historically, similar transitions in other developed countries led to periods of short-term market pricing diverging from the central bank’s more cautious approach. While the new monthly figure may create fluctuations, the quarterly report remains the guiding principle for monetary policy until it is phased out. We recommend using the monthly data for short-term trading while grounding core positions in Overnight Index Swaps (OIS) on the more stable quarterly trends and central bank guidance. The current OIS pricing suggests that the cash rate will stay unchanged until at least the middle of next year, reflecting a more measured outlook. Create your live VT Markets account and start trading now.

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