Australia's inflation jumps to 4.3% in September, raising odds of RBA hike

Australia's inflation rate rose to 4.3% in the year to September 2026, up from 4.0% in August and above the 4.2% that economists had expected, the Australian Bureau of Statistics (ABS) said on Wednesday, October 28. Housing and petrol were the biggest drivers, and the hotter figure makes a fifth interest rate rise of the year by the Reserve Bank of Australia (RBA) at its November 2–3 meeting a real possibility.

The figures

Consumer prices rose 0.8% in September alone, double August's 0.4% rise, and 1.3% over the whole September quarter. The trimmed mean — the RBA's preferred gauge of underlying inflation, which strips out the biggest price swings — rose to 3.6% a year, from a revised 3.5% in August. It increased 1.0% in the quarter, above the 0.8% the central bank had forecast.

Measure	September 2026	August 2026
Headline CPI, annual	4.3%	4.0%
Headline CPI, monthly	0.8%	0.4%
CPI, September quarter	1.3%	—
Trimmed mean, annual	3.6%	3.5% (revised)
Trimmed mean, quarter	1.0%	—
Housing, annual	5.2%	—
Transport, annual	8.7%	—
Automotive fuel, monthly	9.4%	14.8%

"Housing was the largest contributor to annual inflation in September, rising by 5.2 per cent," said Rachael McCririck, the ABS head of price statistics. New dwelling prices were up 4.7% over the year, slightly slower than in August, while electricity costs also pushed the housing group higher. Transport was the second-largest contributor, as fuel prices rose 9.4% in the month after a 14.8% jump in August. The ABS said this was driven by higher world oil prices.

Background

Inflation in Australia has climbed steadily through 2026. The annual rate was 3.8% in January, hit 4.6% in March, eased to 3.5% in July and has risen again since. The global oil shock linked to the conflict around the Strait of Hormuz has pushed crude prices above $100 a barrel for much of the year, and petrol has fed directly into Australian household bills.

The RBA has responded by raising its cash rate four times this year, most recently in September, when a unanimous board lifted it to 4.60% — the highest level in about 15 years. At the time, softer August data had led some economists to expect a pause in November. September's figures have reversed that view.

Reactions

RBA Governor Michele Bullock, appearing before a Senate committee after the release, said the latest numbers were in line with the upside inflation risks the bank had warned about, but declined to say what the board would decide next week. Commonwealth Bank economists now forecast a 25-basis-point rise to 4.85% on November 3, and ANZ has kept its forecast of a further hike to the same level.

Currency markets reacted quickly: the Australian dollar strengthened against the New Zealand dollar after the data, helped also by New Zealand's central bank leaving its own rate on hold earlier on Wednesday.

Why it matters

For Australian households, a higher cash rate would add to mortgage repayments that have already risen four times this year, at a moment when house prices have been falling in every capital city. Renters and drivers are feeling the squeeze from housing and fuel costs directly.

For the wider region, Australia's figures are another sign that the oil shock is keeping inflation high across energy-importing economies. Pakistan's central bank raised its own policy rate to 12% on Monday for the same reason, and New Zealand, Japan and the US Federal Reserve are all weighing how long high fuel prices will last.

What happens next

The RBA board announces its decision at 2:30 pm Sydney time on Tuesday, November 3, 2026, alongside its quarterly Statement on Monetary Policy with new forecasts. The ABS releases the October CPI on November 25, 2026. Markets will also watch the US Federal Reserve decision later on Wednesday for signals on global rates.