By Shane Rodgers
Australia’s cost-of-living challenges are showing no signs of improving, with a higher inflation figure putting even further pressure on interest rates.
The Consumer Price Index (CPI) rose 4.3 percent in the 12 months to September 2026, up from 4.0 percent in the 12 months to August.
The increase comes just days before the Reserve Bank (RBA) is due to meet to review interest rates.
The RBA is tasked with keeping inflation between two and three percent. Despite four interest rate rises in 2026, the Reserve has had virtually no success in keeping inflation in check.
This is largely due to inflation being mostly driven by supply-side cost pressures in areas like fuel and housing, and the failure of the Federal Government to contribute to demand restraint by curbing national spending.
The result is Australians being hit with ever-higher costs for everything, and still being saddled with higher mortgages because the Reserve Bank has no other levers to meet its inflation mandate.
Australian Bureau of Statistics (ABS) head of prices statistics Rachael McCririck said housing was the largest contributor to annual inflation in September, rising by 5.2 percent.
“Annual inflation of 5.2 percent for housing reflected rising costs for both new dwellings and electricity,” she said.
“New dwelling prices rose 4.7 percent in the 12 months to September as builders passed on higher costs for materials and labour. This is down from 5.4 percent in the 12 months to August.”
Transport was the second largest contributor to annual inflation in September, rising by 8.7 percent, due to higher automotive fuel prices.
“On a monthly basis, automotive fuel prices rose 9.4 percent in September, compared to a rise of 14.8 percent in August. This was driven by higher world oil prices,” Ms McCririck said.
There was slightly better news in the “trimmed” inflation annual figures, which strips out short-term shocks.
Trimmed mean annual inflation was 3.6 percent in September. This was 0.1 percentage points higher than August.
The full report is here
