Australia's annual inflation rose to 4.3% in the year to September 2026, up from 4.0% in August, with housing and fuel driving the increase and the Reserve Bank's preferred core measure also edging higher.
Australia's annual inflation rose to 4.3% in the 12 months to September 2026, up from 4.0% in the 12 months to August, the Australian Bureau of Statistics reported on 28 October. The result came in above market expectations of 4.2%, and leaves inflation well above the Reserve Bank of Australia's 2% to 3% target range.
Consumer prices rose 0.8% in the month of September, or 0.6% in seasonally adjusted terms, and 1.3% over the September quarter. The trimmed mean, the Reserve Bank's preferred underlying measure, rose 3.6% over the year, up from a revised 3.5% in August, and 1.0% over the quarter. Housing was the largest contributor to annual inflation, rising 5.2%, followed by transport, up 8.7%. New dwelling prices rose 4.7% over the year as builders passed on higher materials and labour costs, electricity costs climbed 12.8%, and automotive fuel prices jumped 9.4% in the month on higher world oil prices, after a 14.8% rise in August.
The release is the last major inflation reading before the Reserve Bank's next decision on 3 November. The cash rate stands at 4.60% after the board raised it by 25 basis points on 29 September, its fourth increase of 2026. Reserve Bank Deputy Governor Andrew Hauser said on 21 October that the inflation outlook looked materially worse than the bank had projected in August, while September employment figures showed unemployment rising to 4.7%.
The bureau's release confirms the headline and trimmed mean figures, and the bureau's head of price statistics, Rachael McCririck, confirmed housing as the largest contributor and transport as the second. The 4.2% forecast figure comes from market previews rather than the bureau, so it is reported here as an expectation the outcome beat, not as an official figure. Nothing in the bureau's release itself predicts the November decision, and forecasts for that meeting differ: ANZ and Westpac expect a fifth increase in November, while CBA and NAB expect the board to hold, though neither has ruled out a move.
A hotter-than-expected print, with both headline and underlying inflation moving away from target, keeps pressure on the board to maintain restraint at its November meeting. For households, the drivers are concrete rather than abstract: new homes cost more to build, electricity bills reflect the end of government rebates, and fuel prices have risen sharply for two months running. The split among the major banks over November shows how finely balanced the decision now looks, with persistent housing costs arguing for tighter policy and a softening jobs market arguing for caution.
The Reserve Bank's decision on 3 November will confirm whether the board treats this release as grounds for another increase or as a reason to hold and wait for further evidence.