Inflation rate rises higher than expected

THE Consumer Price Index rose 4.3 per cent in the 12 months to September 2026, up from four per cent in the 12 months to August, according to the latest data from the Australian Bureau of Statistics.

Rachael McCririck, ABS head of price statistics, said: “Housing was the largest contributor to annual inflation in September, rising by 5.2 per cent".

“Annual inflation for housing reflected rising costs for both new dwellings and electricity.

"New dwelling prices rose 4.7 per cent in the 12 months to September as builders passed on higher costs for materials and labour. This is down from 5.4 per cent in the 12 months to August.” 

Transport was the second largest contributor to annual inflation in September, rising by 8.7 per cent, due to higher automotive fuel prices.

“On a monthly basis, automotive fuel prices rose 9.4 per cent in September, compared to a rise of 14.8 per cent in August. This was driven by higher world oil prices,” McCririck said.  

When prices for some items change significantly, measures like the trimmed mean inflation rate can give more insights into how underlying inflation is trending without the impact of temporary shocks.

In September, automotive fuel was excluded from the trimmed mean and this was a key driver of the difference between headline and trimmed mean inflation. 

“Trimmed mean annual inflation was 3.6 per cent in September. Trimmed mean annual inflation in August, as released last month, was 3.6 per cent, but a change in seasonal factors has seen that revised down to 3.5 per cent,” McCririck said. 

The quarterly movement for the CPI was 1.3 per cent and for the trimmed mean (pre-October 2025 basis) was one per cent.