Australia Seen Raising Rates Again in November After Inflation Exceeds Forecasts
Key Facts
Australia’s consumer price index rose 4.3% in the 12 months through September 2026, from 4.0% through August, accelerating and bringing price pressures back to the forefront ahead of the Reserve Bank of Australia’s decision scheduled for Nov. 3. Australian Bureau of Statistics data showed the index increased 0.8% in September in unadjusted terms, or 0.6% after seasonal adjustment. Deputy Governor Andrew Hauser said the figures were broadly in line with market and central bank expectations, but described them as "much too high."
The monthly trimmed mean averaged 3.6% annually in the 12 months through September, compared with 3.5% in the corresponding period through August after a revision to the previous reading. On a monthly basis, the measure rose 0.3% in September. The underlying reading is important for tracking price trends because it provides a complementary measure to the headline index, which was 4.3% annually in the same month. Australian Bureau of Statistics data also showed headline annual inflation in September was at its highest level since March 2026, when it reached 4.6%.
Transport costs were among the main contributors to the increase, with prices in the group rising 8.7% year over year in September and 3.0% during the month. The recreation and culture group recorded a monthly increase of 3.8%, while housing prices rose 5.2% annually. The figures show the annual increase was not confined to one component, with price growth varying across sectors. In its forecasts issued in August, the central bank said elevated inflation resulted from persistent domestic price pressures, alongside energy cost pressures linked to the conflict in the Middle East. The bank added that spending in the economy would need to slow to bring inflation down, and that the full effects of previous interest-rate increases had yet to emerge.
The Reserve Bank of Australia said in its forecasts issued in August that inflation was not expected to return to the midpoint of its 2%–3% target range before early 2028. That path puts the bank’s price outlook in context for the upcoming monetary policy decision, while the latest inflation reading remains among the most recent indicators available before the meeting. The cash rate target currently stands at 4.60%, the level in effect since Sept. 30, 2026. The bank scheduled its next rate update for Nov. 3 at 2:30 p.m. Sydney time. Inflation data alone do not determine the bank’s decision, which will be issued as scheduled.
In trading on Oct. 28, the ASX 200 closed little changed at 8,847 points, according to a market snapshot published at about 4:15 p.m. Sydney time. The Australian dollar rose 0.1% to 70.32 U.S. cents in the same snapshot. The currency’s limited move came alongside data showing inflation remained elevated, while the main share index was steady. The next price data are due on Nov. 25, when the Australian Bureau of Statistics publishes the consumer price index for October. That follows the Reserve Bank’s decision on Nov. 3, putting the monetary policy update ahead of the next monthly inflation report.