Australia’s annual consumer inflation rate reached 4% in August – its highest level since May – largely because of fuel and electricity price increases, data from the Australian Bureau of Statistics (ABS) show.
Its annual trimmed mean inflation rate – which excludes the largest positive and negative inflation contributors – stood at 3.6% in August, unchanged from May-July, but above early 2026 levels, ABS data released on 30 September show. Australia’s trimmed mean inflation rate hovered between 3.3% and 3.4% in January-April.
Australia’s housing-related inflation rate reached 5.7% in August, up from 5% in July, entirely because of electricity cost increases. Annual electricity price changes have been volatile in recent months due to the Federal Government’s timing of 2025 electricity rebates.
Electricity prices rose by 13.2% on the year in August, up from 6.1% in July, but down from 22% in June, because of rebate timing issues.
Fuel prices increased by 13.5% in August, up from 7.5% in July, largely because the Government ended its diesel and petrol excise cut on 2 August. And they likely rose again in September because of Brent crude price hikes and escalating violence in the Middle East.
Retail petrol and diesel prices in Australia’s five largest cities averaged A$2.37/litre and A$2.86/litre, respectively, on 23 September, up from A$2.05/litre and A$2.49/litre on 2 September, data from the Australian Competition & Consumer Commission (ACCC) show.
Brent crude futures prices last traded at $98.26/barrel (A$141.37/barrel) on 1 October, up from $94.65/barrel on 1 September, data from Trading Economics show. Brent crude prices increased on 11 September because Saudi Arabia closed its East-West oil pipeline on 10 September, in response to militia attacks.
ABS’ inflation release comes a day after the Reserve Bank of Australia’s (RBA) Monetary Policy Board voted to lift its official cash rate from 4.35% to 4.6% because of high fuel prices, artificial intelligence-related investment, and capacity constraints.
“[The Board will] … increase interest rates again if that’s what’s needed to get inflation down,” RBA Governor Michele Bullock said on 29 September. “What we’re trying to do is make sure that we have financial conditions tight enough so that, looking forward, … inflation pressure eases,” Bullock added.
The Board considered holding its cash rate target at 4.35% because of downside inflation risks related to housing costs and Iran war-related uncertainty. It raised its target because of more severe upside risks.
By Avinash Govind