Australia’s inflation accelerated again in September 2026, with the annual Consumer Price Index (CPI) rising to 4.3% from 4.0% in August. This figure exceeded market expectations of 4.2% and reached its highest level since March, moving further away from the Reserve Bank of Australia’s (RBA) inflation target range of 2–3%.
The greatest pressure stemmed from the transport sector, where inflation surged to 8.7% from 5.6% previously. Rising fuel prices, driven by high global oil prices, were the primary catalyst. Inflation for food and non-alcoholic beverages also increased, climbing to 3.2% from 3.0%.
Meanwhile, inflation in the housing sector slowed to 5.2% from 5.7% in August, though it remained one of the largest contributors to overall price increases. Core inflation, measured by the trimmed mean CPI, stood at 3.6% year-on-year—remaining at its highest level since September 2024 and aligning with market forecasts.
On a monthly basis, the CPI rose by 0.8%, surpassing the 0.7% expectation and marking a sharp increase from the 0.4% growth recorded in August. This represents the largest monthly jump in the past six months, reinforcing the signal that price pressures in Australia have yet to fully subside.
These hotter-than-expected inflation data may increase pressure on the RBA to maintain a tight monetary policy stance or consider further interest rate hikes. While such conditions could provide support for the Australian dollar, they also carry the risk of raising borrowing costs and dampening both consumption and economic growth.