Australia's Inflation Rises to 4.3% in September as Core Prices Beat RBA Forecast Before November Meeting

Australian consumer prices rose faster than expected in September, and the Reserve Bank of Australia's preferred gauge of underlying inflation ran ahead of the central bank's own forecast for the third quarter, data released on Wednesday, October 28, 2026, showed. The monthly Consumer Price Index rose 0.8% in September and 4.3% from a year earlier, up from 4.0% in the 12 months to August, the Australian Bureau of Statistics (ABS) said.

Trimmed mean inflation, which strips out the largest price swings, was 3.6% in the 12 months to September, up from a revised 3.5% in August. The ABS said the August figure had been revised down from 3.6% because of a change in seasonal factors. In seasonally adjusted terms, the headline CPI rose 0.6% in the month.

Quarterly core measure tops the RBA's forecast

Alongside the monthly figures, the ABS published quarterly data. The quarterly trimmed mean rose 1.0% in the September quarter, lifting its annual rate to 3.7% from 3.6%, according to the RBA's compilation of the measures. Headline CPI rose 1.3% over the quarter and 3.9% from a year earlier on that basis.

The 1.0% quarterly core reading was in line with economists' expectations but exceeded the 0.8% increase the RBA had forecast in its August Statement on Monetary Policy, AAP reported. The RBA's inflation target is 2% to 3%.

Housing, fuel and travel drive the annual rate

"Housing was the largest contributor to annual inflation in September, rising by 5.2 per cent," Rachael McCririck, the ABS head of price statistics, said, ABC News reported. Within housing, new dwelling prices rose 4.7% over the year, electricity rose 12.8% and rents rose 3.6%. The ABS said the jump in electricity costs largely reflected the ending of Commonwealth electricity rebates over the year.

Transport was the second-largest contributor, rising 8.7% from a year earlier. Automotive fuel prices were up 23.6% over the year and rose 9.4% in September alone, which the ABS attributed to higher world oil prices.

Other movements in the release included:

• Recreation and culture rose 4.5% annually and 3.8% in the month, driven by domestic holiday travel and accommodation, which climbed 8.0% in September during school holidays and major sporting events.
• Games, toys and hobbies rose 15.5% over the year, which the ABS linked to price increases in memory and storage components being passed on to consumers.
• Food and non-alcoholic beverages rose 3.2%, led by meals out and takeaway food at 3.9%.
• Tobacco rose 8.3%, down from 11.5% in August after an additional 5% excise increase that had applied in the previous three Septembers ended.
• Clothing and footwear rose 0.4%, with accessories slowing to 5.3% as gold prices fell.

Services inflation was 4.1% in September and goods inflation was 4.6%, according to the ABS.

Central bank officials testify as data lands

The figures were published while RBA Governor Michele Bullock and other senior officials were appearing before a Senate estimates committee. In her opening statement, Bullock said the Monetary Policy Board had raised the cash rate target by 25 basis points since the committee's June hearing, bringing the cumulative increase this year to 100 basis points.

Bullock said the conflict in the Middle East had re-escalated and that global energy prices were "much higher than had been assumed in the August forecasts." She said "some of the international and domestic upside risks to inflation have materialised or are materialising," and that inflation would therefore likely be higher than the RBA's August base case. She also said the labour market "seems a little tighter than we had previously judged," despite the unemployment rate rising a little more than expected.

Deputy Governor Andrew Hauser told the hearing that inflation was broadly in line with the bank's expectations but too high, according to ABC News. "The Monetary Policy Board will meet next week," Bullock said, SBS News reported. "A key question is whether the tightening in monetary policy to date will be sufficient to bring inflation back to target in a reasonable time."

Markets move toward a November increase

After the release, market pricing put the probability of a 0.25 percentage point increase at the RBA's meeting next week at about 85%, according to Bloomberg data cited by ABC News. AAP reported that bond-market pricing for a November move climbed from about 60% before the data to above 80%, citing Global X strategist Marc Jocum, and that economists at NAB and Commonwealth Bank switched their forecasts from a hold to an increase, joining ANZ and Westpac. The board's decision is due on Tuesday, November 3, and an increase of that size would take the cash rate to 4.85%, Pound Sterling Live reported.

KPMG Australia chief economist Brendan Rynne called the figures "the last data point necessary for the RBA to increase the cash rate for a fifth time this year," according to ABC News. Betashares chief economist David Bassanese said his base case was an increase next week followed by a hold in December.

Treasurer Jim Chalmers said high fuel prices, which rose 9.4% in September, were the primary driver of the jump in headline inflation, and described the inflation challenge as one "which is persisting longer than anyone would like." He promised more savings measures in the December mid-year budget update, AAP reported. Opposition treasury spokesperson Tim Wilson said households needed the government to bring inflation under control.

The Australian dollar rose to a five-week high near 0.7055 U.S. dollars after the release before the U.S. dollar firmed ahead of the Federal Reserve's decision, Pound Sterling Live reported. The Reserve Bank of New Zealand held its policy rate on Wednesday, the same report said. The ABS will publish October CPI data on November 25.