Highlights

  • Bullock told senators inflation is "likely to remain elevated for some time," encoding duration as the key risk.
  • Oil and related prices have increased sharply and will add materially to inflation, according to the Governor's Senate statement.
  • The August upside risks to inflation have partly materialised, with excess demand and global cost pressures above August forecasts.
  • Weak productivity limits the prospect of real wage growth, meaning persistent inflation erodes living standards further.

Central bank statements are drafted with care, and individual phrases often carry more weight than they first appear to. In Governor Michele Bullock's opening statement to the Senate Economics Legislation Committee on 28 October 2026, the phrase that most rewards unpacking is this: "inflation is likely to remain elevated for some time."

What Elevated Means Here

Start with where inflation stands. On the RBA's homepage, headline CPI is at 4.3% against a 2-3% target range. Bullock also described recent annual inflation as running at around 3.5 to 4 per cent, and at her September media conference said "the underlying inflation rate's been about 3.5 per cent for the past six months." Both measures are above the target range.

Bullock outlined the history for senators: inflation peaked at 7.9% at the end of 2022, fell within target during 2024-25, then picked up in the second half of 2025. By late October 2026, it had been above target again for over a year. "Elevated" therefore describes a sustained departure from the target band, not a brief spike.

Why the Warning Is About Duration

The key word is "some time." Bullock gave several reasons. The August 2026 Statement on Monetary Policy projected a return to the target midpoint at a date that the SMP In Brief summary states as early 2028. Bullock described the August risks as skewed to the upside. Those risks have since partly materialised, meaning inflation will likely be higher than the August base case.

A renewed energy shock is one cause. Bullock said renewed Middle East conflict pushed global energy prices well above August assumptions. She also pointed to cost pressures from AI demand, agriculture, and extreme weather as additional global sources.

Productivity and Living Standards

Bullock linked weak productivity to constrained prospects for real income growth, saying "there's not going to be real wage rises coming down the pipeline." In an environment where wages are not rising in real terms, persistent inflation above target directly erodes household purchasing power.

She was also clear that wages are not themselves driving the cost pressure: "Rises in wages are not driving these cost pressures." The warning about elevated inflation and limited real wage growth is therefore about the squeeze on living standards from two directions simultaneously: prices rising and real wage growth absent.