The Commonwealth Bank, the nation’s biggest lender, has pushed back any expectations of a rate cut this year after crucial inflation data released on Wednesday.

The CBA’s move means all four major banks have ruled out an official interest rate cut from the Reserve Bank board at next week’s final meeting of the year.

As of Wednesday afternoon, all were predicting a 0.25 percentage point cut in February 2025.

The latest data showed Australia’s annual inflation rate has returned to the 2-3 per cent range targeted by the central bank, clocking in at 2.8 per cent in the September quarter.

The headline annual rate was down a whole percentage point from the June quarter and landed broadly in line with expectations.

The Australian Bureau of Statistics said it was the lowest annual inflation rate in more than 3½ years.

Treasurer Jim Chalmers hailed the result, saying energy rebates were making a “meaningful difference” in the fight against inflation but there were other wins in the dataset.

“I know our political opponents will pretend wrongly, falsely, deliberately that this is only about energy rebates,” he said.

“Underlying inflation has come off substantially as well, and that shows broader, underlying pressures in our economy are easing considerably as well.”

New data from @ABSStats shows inflation at 2.8% is at its lowest in almost 4 years. It’s back in the RBA’s target band for the 1st time since 2021.

Underlying inflation is at its lowest in almost 3 years.

We inherited much higher & rising inflation, now it’s lower & falling.…

— Jim Chalmers MP (@JEChalmers) October 30, 2024

However, the RBA’s focus on the underlying trimmed mean, which is still outside the target band at 3.5 per cent annually, is likely to spell bad news for cash-strapped households hanging out for a cut to official interest rates.

The closely-watched figure is a measure of underlying inflation that crops away major price changes at either end.

The September-quarter figure was in line with consensus forecasts and down from 4 per cent in the three months to June.

On a quarterly basis, the trimmed mean rose 0.8 per cent, following a rise of 0.9 per cent in the June quarter.

The trimmed inflation data was also higher than forecast by the Commonwealth. CBA updated its cash rate forecast shortly after the data was released, pushing the first projected cash rate cut out from December 2024 to February 2025.

CBA head of Australian economics Gareth Aird said the latest figures on underlying inflation were “not low enough” for a cut to official interest rates this year.

“The Q3 24 trimmed mean was a touch firmer than we anticipated and as a result we no longer expect the RBA to commence normalising the cash rate in December 2024,” Aird said.

“Notwithstanding, the disinflation process is intact and we pencil in February 2025 for the first 25 basis point rate cut.”

There is a consensus among economists that the RBA board is unlikely to deliver a rate cut when it meets next week.

“Although today’s figures are a step in the right direction, concerns surrounding the persistent tightness in the labour market give the RBA every reason to maintain the status quo at 4.35 per cent next month,” RSM Australia economist Devika Shivadekar said.

“While the RBA continues to understand what is driving the strength in job creation and rising employment figures, the likelihood of them bringing forward a much-anticipated rate cut remains small.”

As expected, energy bill discounts and lower prices at the fuel pump weighed on the headline figure, with the quarterly rate of 0.2 per cent well below the 1 per cent rise in the quarter before.

Shivadekar said the decrease in headline inflation was unsurprising with the drop in certain key components largely driven by subsidies and global factors.

“Today’s figures are good news and some of the lowest we’ve seen since the pandemic,” she said.

“Consumer spending is now pivotal for both the RBA and businesses alike with upcoming retail events like Black Friday, Cyber Monday, and the holiday season presenting prime opportunities for elevated spending towards the end of the year.”

Opposition treasury spokesman Angus Taylor said home-grown inflation was still too high.

“The data makes it clear – Australians are paying higher prices, higher taxes and higher mortgage repayments because of Labor’s home-grown inflation,” he said.

ABS head of prices statistics Michelle Marquardt said the quarterly outcome was the lowest since the fall in June 2020 when child care was made free during the pandemic.

Most of Australia’s major banks do not expect easing to start until 2025.

-with AAP