Annual CPI inflation reached 4.3% and underlying inflation 3.6%, leaving the Reserve Bank widely expected to raise its 4.6% cash rate again on 3 November.
Australia's headline inflation rate accelerated to 4.3% in the year to September, according to Australian Bureau of Statistics figures reported on Wednesday. The Reserve Bank of Australia's preferred gauge, underlying inflation, which strips out volatile prices, came in at an annual 3.6%. Both readings sit well above the central bank's 2.5% target, and the data landed days before the bank's next monetary policy decision on 3 November, when most economists expect another increase in the cash rate.
The price pressures were broad. Housing, the largest category in the consumer price index, was the biggest contributor to annual inflation and rose 5.2%, as builders passed on higher material and labour costs and electricity prices stayed elevated. Transport costs climbed 8.7% over twelve months, largely because of higher fuel prices linked to the conflict involving the United States, Israel and Iran, while food prices rose a further 3.2%. Treasurer Jim Chalmers said high oil prices and a recovering private sector were the main causes and called an end to the Middle East war the most important relief for households, while critics have also pointed to government spending and weak productivity.
The cash rate already stands at 4.6%, its highest level in 15 years, after four increases in 2026. RBA deputy governor Andrew Hauser told a Senate estimates hearing the inflation numbers were 'too high' and warned of a 'nightmare' risk that longer-term inflation expectations could rise, although he said this was not necessarily happening yet. Deloitte Access Economics partner Stephen Smith, who expects a rise next week, noted the difficulty that household spending is subdued, the labour market has softened and the housing market has weakened. Figures reported here come from a single news report of the official data, and the central bank's decision itself had not yet been made.
