The Australian Bureau of Statistics released consumer price index data showing annual headline inflation rose to 4.3% in the year to September, up from 4% the previous month, The Guardian reported. The monthly CPI increase was 0.8% in September, up from 0.4% in August, while the annual trimmed mean, the RBA's preferred measure of underlying inflation, came in at 3.6%, up from a revised 3.5% in August.
The headline outcome exceeded economists' expectations of up to 4.2% and came in well above the RBA's previous forecast of around 3.4%. The cash rate currently stands at 4.6%, the highest level since 2011, after four rate rises in 2026. After the CPI figures were published, Bloomberg data showed market pricing assigned about an 85% probability to a 0.25% rate rise at the November meeting, which is scheduled for 3 November.
Automotive fuel prices rose 9.4% in September on a monthly basis, driven by higher world oil prices, and were 23.6% higher than a year earlier. Housing ranked first as an annual inflation driver, rising 5.2% in the year to September, while transport costs rose 8.7%, the second largest category contributor.
Food prices rose 3.2% over the year, health prices rose 3.7% annually, and recreation costs rose 4.5%, driven by domestic holiday travel and accommodation up 5.3%. Electricity prices stayed 12.8% above prior levels, with expired federal government rebates the principal explanation.
Deloitte Access Economics partner Stephen Smith said the RBA had little appetite for allowing inflation expectations to drift higher after a prolonged period above target, noting that the economy was already slowing, with subdued household spending, a softer labour market and a weakened housing market. He said he expected a rate rise the following week. KPMG's Brendan Rynne said the data showed pricing pressures in the Australian economy were growing rather than easing.
Australians with mortgages face the prospect of a further rate rise at the RBA's next meeting, which would be the fifth increase in 2026 on top of a cash rate already at its highest point since 2011. Housing, food, transport and health costs are all rising, affecting renters, homeowners, motorists and households generally.
Reporting: The Guardian, ABC News, The Conversation, The Motley Fool Australia, The Nightly
Written by Pick & Scroll News from the reporting and documents linked above.
