A key price gauge shows cost of living pressures are easing, but the treasurer warns Australia's inflationary challenge is far from over.
Inflation fell to 6.9 per cent in the year to October after hitting 7.3 per cent in September, according to the monthly consumer price index.
Recently introduced by the Australian Bureau of Statistics to supplement the main quarterly index, the monthly measure of price pressures remains well above the two to three per cent inflation range targeted by the central bank.
Trimmed mean inflation declined slightly from an annual pace of 5.4 per cent in September to 5.3 per cent in October.
Treasurer Jim Chalmers cautiously welcomed the slowdown in inflation but warned the recent floods and surging energy costs were yet to impact prices.
"Importantly, this data does not fully include the price impacts of the recent floods, nor the impact from higher energy costs in recent months," he said in parliament.
Softening prices across some key categories helped pull the index lower as better growing conditions fed into lower prices for fruit and vegetables.
The cost of the fresh food items increased at an annual rate of 9.4 per cent in October compared to 17.4 per cent in September.
Holiday travel and accommodation prices also moderated dropping from 12.6 per cent in September to 3.7 per cent annual growth in October after the end of school holidays and peak European and American travel seasons helped pull airfares down.
But the restoration of the full fuel excise appeared in the October reading, pushing this indicator up slightly, as did low vacancy rates, which fed into higher rents.
ABS head of prices statistics Michelle Marquardt said a scheduled change to the way the bureau calculated the consumer index in order to reflect shifting spending patterns was partially responsible for the unexpected monthly decline.
Under the old weighting system, the headline inflation reading would have been 7.1 per cent rather than 6.9 per cent, she said.
St George economist Jameson Coombs said the monthly index was more volatile than the quarterly version and the monthly slip did not necessarily indicate a changing trend.
"(The rate) is very elevated and suggests inflation remains broad-based across the economy," he said.
Despite the weakening inflation figure, NAB economists said the results were unlikely to sway the RBA's opinion on interest rate hikes.
They still expect inflation to peak in the final quarter of 2022 and three more 25-basis point rate rises in December, February and March.
Other experts think the RBA is closer to the end of its hiking cycle.
Commonwealth Bank economists think the central bank will hike once more in December by 25 basis points before hitting pause to let tighter monetary policy wash through.
Separate figures from the ABS showed new dwelling approvals continued tracking down in October, falling six per cent over the month after a 8.1 per cent drop in September.
Apartment approvals led the decline, while private-sector houses decreased by only 2.2 per cent.
The bureau also released data on completed construction work, which rose 2.2 per cent in the September quarter as the industry continued to process a significant backlog.
After a depressed June quarter reading, residential building activity lifted by 1.3 per cent over the September quarter.
Non-residential building activity increased by 1.1 per cent in the quarter and activity was expected to remain strong due to a sizeable pipeline of new projects.
