Australian Inflation Hits 4.3% in September, Putting Price Concerns Back in Focus
Key Facts
Annual inflation in Australia accelerated to 4.3% in the 12 months through September, from 4.0% in the period through August, according to the Australian Bureau of Statistics. On a monthly basis, the consumer price index rose 0.8% in original terms and 0.6% after seasonal adjustment. By contrast, annual inflation measured by the trimmed mean was 3.6%, compared with August’s reading, revised to 3.5%. The bureau had initially published August’s reading at 3.6% before revising it due to changes in seasonal factors. The figures put faster headline price growth alongside a slower rise in the underlying measure monitored by policymakers.
The gap between the headline index and the trimmed mean came as motor fuel prices jumped 9.4% in September on a monthly basis, after rising 14.8% in August, according to the bureau. It said higher global oil prices contributed to the increase in fuel prices. Motor fuel was also excluded from the trimmed mean calculation in September, a key factor in the widening gap between the two measures. Annually, fuel prices rose 23.6%, making them the largest contributor to the increase in the transport group. Transport prices climbed 8.7% in the 12 months through September, while housing prices rose 5.2%, reflecting higher costs for new homes and electricity.
The bureau’s series shows annual inflation at 3.6% in September 2025, before rising to 4.6% in March 2026, then easing to 3.5% in July and climbing again to 4.3% in September. In a speech on October 28, Reserve Bank of Australia Governor Michele Bullock said inflation was "likely to be higher than the August central case." She attributed this to some domestic and international upside risks starting to materialize. She said the intensifying conflict in the Middle East and higher energy and oil prices were adding to global price pressures. She also pointed to pressures related to the AI boom and extreme weather, alongside domestic capacity constraints and weak productivity growth.
According to the bank’s August forecasts, underlying inflation was expected to remain above 3% until mid-2027, before falling to 2.5% by early 2028. The policy board targets a return of inflation to the midpoint of a range of 2% to 3%. Bullock said that path did not mean the bank had settled on its response to the new data. She said the board would discuss the flow of data the following week and whether previous monetary tightening had been sufficient to return inflation to target within a reasonable time. The cash rate target stood at 4.60% as of September 30.
EL7 data showed the Australian dollar against the U.S. dollar closed at 0.70316 on October 28, compared with a close of 0.70247 the previous day. The moves came as the annual inflation reading again drew attention to the impact of fuel and energy on prices. The Australian Bureau of Statistics will release the September producer price index on October 30 at 11:30 a.m. AEDT. The release includes a comprehensive update to producer price index weights.
The Reserve Bank of Australia will release its monetary policy decision statement and Statement on Monetary Policy on November 3, 2026, at 2:30 p.m. AEDT. Bullock is scheduled to hold a news conference that day at 3:30 p.m. The meeting follows her remarks that some inflation risks had started to materialize and that the board would assess the data and whether previous tightening had been sufficient. According to the August forecasts, inflation was not expected to return close to the midpoint of the target range before late 2027. The November 3 decision will be the first announced update to the cash rate target since it stood at 4.60% on September 30.