Australia's economy expanded by 2.1% in the year to September, up from 2% in June, driven by strong investment in data centres and rising household spending on essentials like electricity and rent. However, economic growth slowed to just 0.4% in the July-September quarter, missing the predicted 0.7% rate. Real GDP per capita did not grow in the quarter and only rose 0.4% yearly, showing limited improvements in living standards. Belinda Allen, head of Australian economics at CBA, said, "It was just a year ago that (annual) growth was anaemic at just 0.8%. Fast forward a year and households are spending again thanks to strong income growth driving better sentiment, businesses are investing, residential construction is taking place and the public sector is placing a floor underneath growth." This growth upturn may be reaching the economy's capacity to expand without raising inflation, a risk the Reserve Bank of Australia (RBA) will consider at its upcoming monetary policy meeting. RBA Governor Michele Bullock noted uncertainty about how much more activity can increase without adding price pressures. Inflation jumped to 3.8% annually in October, above the RBA's 2-3% target range, prompting the bank to evaluate whether inflationary pressures are temporary or more persistent. Business investment surged by 2.9% in the quarter, the fastest in over four years, mainly due to "major data centre investment across NSW and Victoria," according to the Australian Bureau of Statistics (ABS). This growth in investment contributed 0.5 percentage points to the quarter's overall economic growth. Despite this, productivity growth remains weak at 0.8% annually, posing challenges for future expansion. Homebuilding also supported growth, with Treasurer Jim Chalmers stating, "The best way to improve living standards and continue to get more growth into the future is to make our economy more productive and resilient and our budget more sustainable, and that’s our focus." Households faced higher costs on essentials such as power bills, with electricity rebates ending, rent, food, and health expenses rising, partly due to a prolonged flu season. Spending on essentials rose 1% in the quarter versus 0.6% previously, while discretionary spending fell 0.2% after a 1.5% jump earlier. Reflecting caution, household savings increased to 6.4% from 6% in the prior quarter.