The consumer price index (CPI) rose 2.1% in October, marking its slowest growth in three years. However, annual discounted average inflation, which excludes volatile price movements, rose 3.5 percent from 3.2 percent in the previous month – indicating a slower-than-expected decline in core inflation.

AMP’s My Bui commented on the data, explaining that the Reserve Bank (RBA) is likely to ignore this month’s CPI report as the October report only reflects around 60 per cent of prices in the consumer basket and does not include updated data for many service items .

She also pointed out that the CPI could be skewed by the deflationary effects of rebates on electricity bills and lower petrol prices, which have sometimes been misleading in the past.

"The RBA has expressed concern about persistent core inflationary pressures, measured mostly by alternative measures, which have shown mixed signals this month," Bui said.

In fact, the data reveals that when outliers such as a 36% drop in electricity prices and a 12% reduction in fuel costs are excluded, the monthly discounted average inflation comes to 3.5%.

"While reduced average inflation still looks on track to fall to the RBA's forecast of 3.4% by the end of the year, it has been declining quite slowly, meaning there is a high risk of a later start to our downgrade forecast on rates in February,” Bui said.

The Commonwealth Bank of Australia (CBA), which recently revised its forecast for a February cut to May, agreed that October's CPI report would not affect the RBA's decision in December.

"Today's report has almost no bearing on the monetary policy decision in December, which will simply be a wait-and-see decision," said CBA senior economist Stephen Wu.

"The RBA will wait until at least full quarterly inflation data for Q4 24 (29/1) before the RBA board meeting in mid-February (18/2), where staff will also present updated economic forecasts."

Bendigo Bank's chief economist, David Robertson, agreed that the latest inflation data supported a no-change decision for December. However, he suggested more evidence could prompt the RBA to cut rates by May as the worst of the cost-of-living shock fades.

"Markets were expecting an RBA cut in February, but have recently scaled back those expectations and are now aligned with our unchanged view of the easing cycle starting in May," Robertson said.

Robertson also highlighted external factors, such as Donald Trump's recent tariff threats, that continue to add volatility to global markets. However, he does not expect them to significantly affect the Australian economy or the RBA's decisions over the next six months.

"[These factors] it will most likely be a medium-term factor through our main trading partners in Asia,” Robertson said.

HSBC's chief economist, Paul Bloxham, was the most bullish on his assessment, saying on Wednesday that the latest data was likely to reinforce the RBA's view that core inflation remains too strong to align with its 2 -3 percent.

"We expect interest rate cuts are still some time away," Bloxham said.

He also noted that HSBC's central forecast is for the RBA to hold off on rate cuts until the second quarter of 2025, followed by a phase of gradual easing. However, he also highlighted the growing risk that the RBA may not cut rates at all in 2025, putting a 25% chance of that outcome.