Australian Producer Prices Rise 1.1% as Construction and Services Increase
Key Facts
Australia’s final-demand price index, excluding exports, rose 1.1% in the September quarter of 2026 and increased 3.6% over the 12 months to that quarter, according to the Australian Bureau of Statistics. The quarterly reading was above economists’ expectations of 1.0%, according to Investing.com. But it showed a slowdown from the 1.3% increase in the June quarter, while the annual rate remained at 3.6%. The bureau attributed the increase mainly to construction and services, as oil and fuel prices fell during the quarter. The reading puts domestic price pressures in focus ahead of the Reserve Bank of Australia’s Monetary Policy Board meeting on November 2 and 3.
Construction was among the sources of the increase, with its output prices rising 1.3% in the September quarter and 4.9% over the 12 months. Non-residential construction prices increased 1.7% quarterly and 4.8% annually, according to bureau data. The bureau said demand for this type of construction is being driven by public works, including hospitals and schools, as well as private-sector data centers. It also cited labor shortages and higher material costs as pressures on the sector. The figures come as demand for residential property continues despite supply constraints, keeping rent increases among the factors the bureau cited behind final-demand price growth.
In services, the bureau said most sectors recorded stronger price growth as labor costs rose. It added that a 4.75% increase in award minimum wages, along with increases resulting from enterprise bargaining agreements and annual contract reviews, lifted input costs. Freight costs for imported goods remained high, the bureau said, adding pressure on some activities. By contrast, oil and fuel prices fell during the September quarter, partly offsetting the broader increase in final demand. The differing trends among these components reflect a divergence between domestic costs, such as wages and construction, and energy prices, which eased their impact during the quarter.
Manufacturing input prices moved in the opposite direction on a quarterly basis, falling 1.0% in the September quarter but remaining 8.9% higher year over year. The bureau attributed the quarterly decline to crude oil prices falling from the previous quarter’s peak. In another measure of prices, the consumer price index rose 4.3% over the 12 months to September, compared with 4.0% through August. Trimmed mean inflation also rose to 3.6% from 3.5% in August, following a revision to the previous month’s reading. The figures come ahead of the central bank’s decision, after the Reserve Bank of Australia raised its cash rate target by 25 basis points to 4.60% on September 29.
The bank said in its previous decision that inflation remained high and that some of the upside risks it had flagged in August were beginning to materialize. It added that cost pressures were leading companies to raise prices for goods and services, or consider doing so. The Monetary Policy Board is scheduled to meet on November 2 and 3, 2026, and announce its policy decision on November 3 at 2:30 p.m. Australian Eastern Daylight Time. The next producer price index release is scheduled for January 29, 2027, and will cover December 2026. The November decision will therefore precede the next producer price data, with the September reading the sector’s latest release before the meeting.