In brief
Inflation in Australia hit 4.3% in September, its highest level in six months, driven by sharp rises in housing and transport costs. The Consumer Price Index rose from 4.0% in August, while the underlying trimmed mean climbed to 3.6%. The Reserve Bank of Australia, after raising its cash rate to 4.6% in September, may consider further hikes, a possibility that has increased sharply in market expectations.
On Wednesday, Canberra announced that Australia’s annual inflation rate spiked to a six‑month high of 4.3 percent in September, according to the Australian Bureau of Statistics, up from 4.0 percent in August and the highest figure since March 2024.
The Bureau’s release specified that the consumer price index rose by 4.3 percent over the 12 months to September, while the trimmed‑mean measure preferred by the Reserve Bank of Australia grew from 3.5 percent in August to 3.6 percent in September.
Housing was the largest contributor to the headline figure, with prices increased 5.2 percent year‑on‑year, followed by transport costs that rose 8.7 percent, largely driven by a jump in gasoline and diesel prices.
Rachael McCririck, head of prices statistics at the ABS, said:
"On a monthly basis, Automotive fuel prices rose 9.4 percent in September, compared to a rise of 14.8 percent in August. This was driven by higher world oil prices,"
Financial analysts at the Commonwealth Bank of Australia had forecast headline inflation would reach 4.2 percent in September, a figure that fell short of the 4.3 percent reading released by the Bureau.
The Reserve Bank of Australia had, in its most recent meeting late in September, raised the cash rate target by 0.25 percentage points for the fourth time in 2026 to a 15‑year high of 4.6 percent, citing the inflationary impacts of the conflict in the Middle East as a major factor.
Australian Broadcasting Corporation reports suggest that the likelihood of another rate hike in November has risen to 79 percent, up from 60 percent before the inflation data was released, a notable change in market expectations.
The data will be considered in the RBA’s Monetary Policy Board meeting scheduled at the start of November, where officials will weigh the possibility of further tightening to address the upward pressure on prices.
Market observers note that while the headline figure is the highest in half a year, underlying inflation remains relatively modest, indicating the Bank may still keep options open regarding future rate adjustments.
What remains uncertain is whether the Reserve Bank will act on these data, how future rate decisions will unfold, and whether inflation will stabilize in the coming months.
