Governor Michele Bullock rejected a comparison between today's inflation and earlier eras, pointing to underlying inflation of about 3.5 per cent, while insisting that it is still too high.

At her media conference on 29 September 2026, the day the Monetary Policy Board lifted the cash rate target to 4.60 per cent, Governor Michele Bullock responded to a comparison between the current inflation episode and earlier eras. Her reply was short and pointed: "Inflation is not in double digits. Inflation is about 3.5 per cent."

The exchange captured a tension the Reserve Bank of Australia (RBA) has had to manage all year. On one hand, the Board has raised rates four times in 2026 because inflation is above target. On the other, the Governor has been at pains to stress that the economy is not in a crisis of the kind associated with much higher inflation in the past.

Which inflation number is she talking about?

Bullock's "about 3.5 per cent" refers to underlying inflation, not the headline CPI. Getting this distinction right matters, because the numbers differ.

  • Headline CPI: 4.0 per cent over the year to August 2026, based on the monthly CPI, which the ABS began publishing in November 2025.
  • Underlying inflation: about 3.5 per cent for the past six months, according to Bullock on 29 September: "the underlying inflation rate's been about 3.5 per cent for the past six months".
  • Trimmed mean: 3.6 per cent in the June quarter 2026, as recorded in the August Board minutes.
  • Target: 2–3 per cent, with a midpoint of 2.5 per cent.
  • Recent peak: 7.9 per cent at the end of 2022, as Bullock noted in her 18 September Opening Statement to the House of Representatives Standing Committee on Economics.

Underlying measures strip out some of the most volatile price movements to give a clearer read on persistent inflation. Headline CPI includes everything, including fuel, which has been a significant influence this year. The August minutes noted that headline inflation eased unexpectedly in the June quarter mainly because of lower retail fuel and travel prices, while the Board's 29 September statement pointed to further disruption to global oil supply from the Middle East conflict and higher fuel prices partly passing through to other goods and services.

On either measure, inflation is well below double digits and below its 2022 peak. On either measure, it is also above target.

Not a crisis, but not comfortable

The Governor's pushback should not be read as a claim that inflation is under control. In the same period she made a series of statements emphasising the opposite.

"Inflation is too high and has been driven by domestic capacity pressures," she said on 29 September. On 18 September she told parliamentarians: "Inflation is too high. We are focused on getting it back down," and warned that "Inflation is likely to remain elevated for some time."

Inflation has been above the 2–3 per cent target since the second half of 2025, Bullock said in that Opening Statement. The August minutes forecast underlying inflation to stay above 3 per cent until mid-2027 before reaching around 2½ per cent in late 2027.

The distinction she drew is about scale and character, not about whether action is needed. "Higher interest rates are needed to ensure inflation returns to target," she said.

The other markers of a crisis that are absent

Beyond the inflation rate itself, Bullock and her colleagues have pointed to several features that distinguish the current period from a more severe episode:

  1. No wage-price spiral. "there is no wage price spiral going on in Australia," Bullock said on 29 September. She attributed fast-rising unit labour costs to weak productivity rather than wages.
  2. A still-low jobless rate. Bullock said unemployment had risen "from 3.5 per cent over the past couple of years to 4.6 per cent". On 18 September, when the latest figure was 4.5 per cent, she said: "The unemployment rate – at 4.5 per cent – is low by historical standards." She also noted that over a million jobs had been created in recent years.
  3. Recession not the base case. "That is not our central base case at this moment," she said.
  4. Orderly markets. "the bond markets are reacting in an orderly way," Bullock said, adding: "So at this stage, I'd say not alarmed, but we are alert to it."
  5. A resilient financial system. The October 2026 Financial Stability Review described "a good degree of resilience", even as "global and operational vulnerabilities continue to mount".

Why the comparison still resonates

If inflation is not in double digits, why do comparisons with earlier eras keep surfacing? Part of the answer lies in what people feel rather than what the annual rate shows. Deputy Governor Andrew Hauser, speaking on ABC's 7.30 on 8 September, said "the price level in the economy has risen by 10, 15, 20 per cent higher than it should have done", and that "People are furious about inflation."

That is a statement about accumulated price rises, not the current rate of change. Even with inflation at about 3.5 per cent underlying, the price level carries the cumulative effect of the high inflation of recent years. Bullock also noted that "fuel prices, fertiliser prices, transport prices, all these things now are permanently higher."

The RBA's concern is to prevent that experience from shaping future price-setting. "It's critical that we stop expectations for high inflation from becoming embedded in price-setting decisions," Bullock said.

The bottom line

Bullock's "Inflation is not in double digits" was a pushback on scale, not a declaration of victory. Underlying inflation is about 3.5 per cent and headline CPI 4.0 per cent, both well below the 7.9 per cent peak of 2022 but above the 2–3 per cent target. The Governor paired her rebuttal with repeated warnings that inflation is too high, and the Board raised rates on the same day. The comparison with earlier eras may resonate because prices are much higher than they were, but the RBA's own measures show a problem of persistence rather than runaway inflation.