Highlights

  • Annual Inflation climbed to 4.3 per cent in the year to September 2026, up from 4.0 per cent in August.
  • The trimmed mean, the RBA's preferred measure, rose to 3.6 per cent annually and 1.0 per cent for the quarter.
  • Market pricing for a 25 basis point November rate rise moved from around 60 per cent to roughly 85–90 per cent after the data.
  • All four major Australian banks were reported to expect a rate increase at the 3 November RBA meeting.

A single data point rarely moves markets so sharply. But Australia's September inflation reading — released by the Australian Bureau of Statistics on 28 October 2026 — landed hard, lifting the odds of a second consecutive Reserve Bank of Australia rate rise from roughly 60 per cent to somewhere between 85 and 90 per cent within days. For millions of Mortgage holders, the implications are concrete.

What the ABS Reported

The monthly Consumer Price Index rose 0.8 per cent in September, and the quarterly index rose 1.3 per cent. Annual inflation reached 4.3 per cent in the year to September, up from 4.0 per cent in August. The ABS trimmed mean — which strips out the most volatile price movements — was 3.6 per cent over the year, following a downward revision to August's figure to 3.5 per cent due to a change in seasonal factors. Trimmed mean rose 1.0 per cent in the quarter.

Housing was the largest contributor, rising 5.2 per cent over the year, reflecting both electricity and new dwelling costs. New dwelling prices rose 4.7 per cent, down from 5.4 per cent in August. Transport was the second-largest contributor, up 8.7 per cent. Automotive fuel drove that: it rose 9.4 per cent in September after a 14.8 per cent rise in August, attributed to higher world oil prices by the ABS head of price statistics.

Where the RBA Stands

The cash rate sits at 4.60 per cent following the 30 September meeting. The RBA Monetary Policy Board meets on Monday and Tuesday, with its decision due at 2:30pm AEDT on Tuesday 3 November alongside updated economic forecasts. The RBA's Deputy Governor described the inflation numbers as in line with expectations but too high, and said the outlook was materially worse than the bank had forecast. The Governor told a Senate estimates hearing that Unemployment would probably rise a little further but that the bank did not expect a recession. Those remarks were reported by the ABC, as the RBA's own statement was not directly retrievable for this article.

What Markets and Economists Expect

Market pricing moved swiftly after the CPI release. Odds of a November increase rose from about 60 per cent to 79 per cent on the day, and by 30 October were sitting at roughly 85 to 90 per cent for a 25 basis point rise to 4.85 per cent. All four major banks were reported to expect the increase. The chief economist at one major bank said further hikes beyond November were not the base case, but the risk of another in February had risen. An economist at a second bank expected a pause after November, while a former chief economist at a third warned that three further hikes could trigger a recession. These are forecasts and opinions, not outcomes.

Implications for Households

For borrowers on variable-rate mortgages, a quarter-point rise adds to repayments already stretched by rising housing costs. Spending data show an uneven picture: growth among Australians aged 65 and over was the strongest of any age group, while those aged 25 to 34 were the weakest. Retailers are already flagging caution — Coles noted on 30 October that supermarket sales growth had moderated in the early weeks of its second quarter amid cost-of-living pressure.

What to Watch

The central uncertainty is whether the RBA's updated November forecasts show inflation remaining above target for longer, and what the board signals about further tightening. Energy markets remain volatile, with Brent Crude reported near US$116 a barrel at the close of trading on 30 October. The next monthly CPI release is scheduled for 25 November 2026.