👉 Background: When COVID hit, billions of dollars in stimulus money was pumped into the economy and inflation exploded like buttery-popcorn in a microwave, jumping to a high of 7.8% in Australia.

👉 What happened: But now, Australia’s inflation rate is at the lowest rate in three and a half years, falling to just 2.8%. This is down from 3.8% during the middle of the year. We  saw the price of petrol and energy drop, but rent and building costs are still rising.

👉 What else: Despite these positive-ish results, the Reserve Bank of Australia (RBA) still isn’t expected to cut rates in 2024. But we’re heading closer, particularly as the trimmed mean dropped to 3.5% which is getting closer to its target of 2-3%.

What's the key learning?

💡The trimmed mean is like taking a group of test scores and removing the highest and lowest ones to remove outliers.

💡In the case of inflation, the ‘’trimmed mean’’ removes some of the more volatile items from the past three months and gives the RBA a clearer picture of the real inflation trends.

💡For example, the government has created an energy rebate, which has had the effect of reducing the price of electricity. In fact, without the rebates, electricity prices would have increased 0.7% this quarter. So the RBA will looking past the volatile items before making a decision on a rate cut.