Inflation jumps to 4.3% as RBA weighs another rate hike

Monthly CPI rose 0.8 per cent in September, more than expected, and underlying inflation picked up to 3.6 per cent.

By LineZotpaper AI staff

Published28 October 2026

Updated28 October 2026

Read Time2 min

Sources9 outlets

Australia's inflation rate accelerated more than expected in September, with annual CPI rising to 4.3 per cent from 4 per cent a month earlier, strengthening the case for another Reserve Bank rate rise when the board meets on 3 November.

Official data released on Wednesday by the Australian Bureau of Statistics showed the consumer price index rose 0.8 per cent in September, up from 0.4 per cent in August, taking annual inflation to 4.3 per cent. The annual trimmed mean, the RBA's preferred measure of underlying inflation, also picked up to 3.6 per cent, after August's figure was revised lower to 3.5 per cent.

Housing was the largest driver of annual inflation, rising 5.2 per cent over the year, ABS head of price statistics Rachael McCririck said. Transport costs were up 8.7 per cent, largely because of fuel prices linked to the conflict between the US and Israel and Iran, while food prices rose 3.2 per cent. The ABS said housing, the biggest category in the CPI, was the largest contributor, followed by transport.

Reserve Bank deputy governor Andrew Hauser told Senate estimates on Wednesday, shortly after the data was released, that the inflation numbers were "too high". He flagged a "nightmare" risk that longer-term inflation expectations would pick up, making it harder to get inflation out of the system. "We don't think it is necessarily crystallising yet, but it is a particular risk," he said. Last week he warned the inflation outlook looked "materially worse" than the RBA had forecast.

The cash rate already stands at 4.6 per cent, its highest level in 15 years. Before Wednesday's data, market pricing put the chance of a November hike at more than 60 per cent, and most economists are tipping another increase. The RBA board begins its meeting on Monday and will deliver its decision on Tuesday afternoon, alongside updated economic forecasts including inflation.

The rising cost of everyday goods comes as unemployment also lifts, adding to political unease in Australia over cost-of-living pressures. Builders have been passing on higher material and labour costs for new dwellings, and electricity prices remain elevated.

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Annual price rises by category, September (ABS)

Annual percentage change in consumer prices for the 12 months to September, as reported by the ABS. Source: Australian Bureau of Statistics

Analysis

Why This Matters

The inflation reading lands days before the RBA's 3 November decision and raises the prospect of another increase to the cash rate, which already sits at a 15-year high.
Households facing rising food, housing and transport costs would feel another hike quickly through mortgage and other lending rates.
The RBA is watching whether longer-term inflation expectations become unanchored, which would make bringing prices under control harder.

Background

Australia's inflation rate has accelerated to 4.3 per cent, above the RBA's 2.5 per cent target. The central bank's preferred underlying measure rose to 3.6 per cent. The RBA has already raised the cash rate to 4.6 per cent, its highest level in 15 years, and officials have signalled borrowing costs may need to rise further. Wednesday's release comes days before the board's next policy decision on 3 November.

Key Perspectives

Andrew Hauser, RBA deputy governor: Says the inflation numbers are "too high" and warns of a "nightmare" risk that longer-term inflation expectations pick up, although he says that risk is not necessarily crystallising yet. Most economists: Are tipping another cash rate increase at the 3 November meeting, according to The Guardian. Market pricing: Before the data was released, markets put the chance of a November hike at more than 60 per cent.

What to Watch

The RBA's decision and updated economic forecasts on Tuesday 3 November.
Whether longer-term inflation expectations start to move, which Hauser described as a particular risk.
Fuel prices and developments in the Middle East conflict, a major driver of transport costs.

Sources

Breaking: Inflation surges more than expected ahead of RBA meeting · ABC News
Inflation jumps to 4.3 per cent, fuelling prospect of Cup Day rate rise · Brisbane Times
Australia’s inflation rate rises to 4.3%, fuelling fears of fifth interest rate hike this year · The Guardian
Hotter-than-expected inflation piles pressure on RBA to raise rates · Australian Financial Review
Australia’s inflation rate rises to 4.3%, fuelling fears of fifth interest rate hike this year · The Guardian
Australians brace for likely rate rise as inflation figures threaten to climb above 4 per cent · 7NEWS
Inflation jumps to 4.3 per cent, fuelling prospect of Cup Day rate rise · WAtoday
Australia’s inflation rate rises to 4.3%, fuelling fears of fifth interest rate hike this year · The Guardian
Breaking: Inflation surges more than expected ahead of RBA meeting · ABC News

Checked

12 claims in this story checked against 2 sources: 11 supported.

Show each claim

SupportedInflation reached 4.3 per cent.Business | The Guardian: “Australia’s headline inflation rate has accelerated to 4.3%”
SupportedThe RBA is weighing another rate hike.Business | The Guardian: “RBA officials have strongly indicated the board may need to lift borrowing costs further”
Partly supportedMonthly CPI rose 0.8 per cent in September, and that monthly rise was more than expected.Latest business news: “Australia's inflation rate picked up more than expected in September, increasing expectations of an interest rate hike next week. The consumer price index rose to 0.8 per cent in the month, from 0.4 per cent in August”
SupportedUnderlying inflation picked up to 3.6 per cent.Business | The Guardian: “The Reserve Bank of Australia’s preferred measure of consumer prices, called underlying inflation, came in at an annual 3.6% to September.”
SupportedAnnual CPI rose to 4.3 per cent from 4 per cent a month earlier.Latest business news: “The consumer price index rose to 0.8 per cent in the month, from 0.4 per cent in August, taking annual inflation to 4.3 per cent, up from 4 per cent a month earlier”
SupportedHousing was the largest contributor to annual inflation in September, rising 5.2 per cent.Latest business news: “"Housing was the largest contributor to annual inflation in September, rising by 5.2 per cent," ABS head of price statistics Rachael McCririck said.”
SupportedTransport costs rose 8.7 per cent, largely because fuel prices were affected by the conflict involving the US, Israel and Iran.Business | The Guardian: “Transport costs have risen 8.7% over the past 12 months, due in large part to escalating fuel prices stemming from the US and Israel conflict with Iran.”
SupportedAndrew Hauser described the inflation numbers as “too high” at Senate estimates on Wednesday.Business | The Guardian: “The RBA’s deputy governor, Andrew Hauser, described the inflation numbers as “too high” at senate estimates on Wednesday, shortly after the data was released.”
SupportedHauser warned of a “nightmare” risk that longer-term inflation expectations would pick up and make it harder to get inflation out of the system.Business | The Guardian: “He said there was a “nightmare” risk that longer-term inflation expectations would pick up, making it harder to get inflation out of the system.”
SupportedHauser said, “We don't think it is necessarily crystallising yet, but it is a particular risk.”Business | The Guardian: ““We don’t think it is necessarily crystallising yet, but it is a particular risk,” Hauser said.”
SupportedLast week Hauser warned that the inflation outlook looked “materially worse” than the RBA had forecast.Latest business news: “Last week, Reserve Bank deputy governor Andrew Hauser warned the inflation outlook looked "materially worse" than the RBA had forecast”
SupportedThe cash rate is 4.6 per cent, its highest level in 15 years.Business | The Guardian: “The cash rate, which informs lending rates including mortgages, already stands at 4.6%, its highest level in 15 years.”