Prices cool quicker than anticipated, as the economy takes a chill pill

Australia’s inflation, how prices for things go up, slowed down a lot in October.

People didn't spend as much money, so it's less likely the Reserve Bank will increase interest rates, which affects how much it costs to borrow money. The cost of living, or the average prices for things, went up by 4.9% over the past year. That's slower than the 5.6% rise in September.

The Australian Bureau of Statistics said this on a Wednesday. Those supposed experts thought prices would go up by 5.2%.

Some of the things that got more expensive were housing by 6.1%, transport by 5.9%, and food and drinks by 5.3%. But the government helped keep some costs from rising too much, like rents and electricity.

Compared to the month before, prices went down by 0.3% in October. Rents went down by 0.4%, and holiday travel costs dropped by 7%. These inflation numbers are the last big ones the Reserve Bank will look at before their final meeting of the year about interest rates. Before this, the bank had increased interest rates 13 times in a year and a half.

Michele Bullock, the newish boss of the Reserve Bank, talked about how they need to be careful. They want to control how much prices go up, but they also don't want to make it hard for the economy to grow or for people to find jobs. Some experts think because people are spending less and prices aren't going up so fast, the Reserve Bank might not increase interest rates again soon.

Talking of the RBA:

The Reserve Bank of Australia's boss, Michele Bullock, was talking at an event in Hong Kong this week. She mentioned that even though there's been a lot of talk about the 13 times interest rates went up, people's money situations at home are doing okay.

She seemed surprised that the economy in Australia handled these interest rate increases so well. Bullock said in The Australian Financial Review that despite all this talk or "noise," households and businesses in Australia are actually doing pretty well. Their money situation, called their "balance sheets," is in a good place.

Bullock mentioned that even though many families and businesses are facing a cost of living challenge, their situations are still good. But she also said it's "very uncertain" if prices will go back to normal in the next two years. She talked about being surprised by how strong the economy has been. It's doing better than expected, which means some prices for things like services are going up a bit more than they thought they would.

Bullock's little talk was to a group of important bankers, all this just before the final meeting of the Reserve Bank's board next Tuesday the 5th of December.

This week, the government will be making those legislation changes to how the Reserve Bank works. They want to change things a lot, like how often the bank's board meets to talk about interest rates. They are supposed to reduce the number of meetings from 11 a year to eight, and each meeting might be held over two days.