Australian Inflation Jumps to 4.3% in September, Adding to Rate Pressure
Key Facts
Australia’s annual inflation rose to 4.3% in September from 4.0% in August, while the consumer price index increased 0.8% during the month after rising 0.4% in the previous month, according to data reported by ABC News on October 28. The data showed trimmed mean inflation at 3.6% annually, after August’s reading was revised to 3.5%. The figures came ahead of the Reserve Bank of Australia board meeting scheduled to begin Monday, with its decision due on Tuesday afternoon. After the data release, market estimates of the chance of a November rate hike rose to about 85%, according to Bloomberg data cited by ABC. That puts the price reading at the center of the bank’s next decision, after it raised rates in September.
The acceleration in annual inflation coincided with higher costs for a number of everyday items. The Guardian said transport costs rose 8.7% over the past twelve months, attributing much of the increase to higher fuel prices linked to the conflict between the United States, Israel and Iran. Food prices rose 3.2% in the year to September, while housing costs increased 5.2%, the newspaper reported. The newspaper said the costs of materials and labor for new homes, as well as electricity, contributed to housing pressures. These items matter to the inflation reading because housing was the largest contributor to the annual increase, followed by transport.
The Australian Bureau of Statistics underscored housing’s weight in the September data; head of price statistics Rachel McCrickard said housing prices rose 5.2% and were the largest contributor to annual inflation. This means price pressures were not limited to fuel and transport, but also included an item with broad influence on the consumer price index. In September, the Reserve Bank of Australia said higher fuel prices had passed through in part to prices for other goods and services. The board had raised the cash rate target by 25 basis points to 4.60% in its decision issued on September 29. The November meeting therefore followed an earlier increase, while prices remained above the inflation target of 2.5%.
Deputy Governor Andrew Hauser warned that the inflation figures were "much too high" and said there was a risk he described as a "nightmare": rising long-term inflation expectations, which would make it harder to get inflation out of the economic system. Bank officials had indicated that higher borrowing costs might be needed to bring price growth back toward the 2.5% target. Minutes of the September meeting showed that markets at the time were pricing in an additional increase of about 15 basis points by the end of the year, followed by another 30 basis points in the first half of 2027. All economists surveyed by the bank also expected an increase at the September meeting, which ended with a rate hike to 4.60%. The expectations in the minutes date from the time of the meeting, while market estimates of the chance of a November increase rose to about 85% after the September data were released.
Ahead of the rate decision, the Australian Bureau of Statistics was scheduled to publish its September producer price index on October 30 at 11:30 a.m. Australian Eastern Daylight Time. The rate-setting board is scheduled to begin its meeting on Monday and announce its decision on Tuesday afternoon, alongside its updated economic forecasts, including inflation projections. The Guardian’s coverage put the decision date at November 3, 2026, and reported that most economists expect another increase in the cash rate. The producer price reading and updated forecasts will be among the data published before or alongside the decision, according to the announced schedule. The cash rate target remains at 4.60%, in line with the bank’s latest decision in September.