Australia Inflation Jumps to 4.3% as November RBA Rate Hike Looks Likely

Australia’s inflation has jumped again, and the Reserve Bank of Australia now faces a difficult decision just days before its next meeting. Figures released by the Australian Bureau of Statistics on October 28, 2026, showed headline consumer prices rose 1.3 percent in the September quarter, lifting annual inflation to 4.3 percent, up from 4.0 percent in August and above the 4.2 percent forecast. The result is the last major inflation release before the Reserve Bank’s November 3 decision, and it has strengthened expectations that borrowing costs will rise again.

The measure the Reserve Bank watches most closely also moved in the wrong direction for anyone hoping for a pause. The quarterly trimmed mean, which strips out the most volatile price movements, rose 1.0 percent in the quarter and 3.7 percent over the year. That annual figure was above the 3.6 percent consensus forecast and above the Reserve Bank’s own August projection for the quarter. Both headline and underlying inflation remain well above the Bank’s 2 to 3 percent target range, a gap that is now hard to ignore.

What the September Figures Show

The details behind the headline matter as much as the headline itself. The September quarter increase of 1.3 percent was more than double the previous quarter’s 0.6 percent gain. A separate monthly indicator told a slightly softer story: the monthly trimmed mean held at 3.6 percent over the year to September, up from a revised 3.5 percent in August. The quarterly and monthly measures are not the same series, so the two figures sit side by side rather than contradicting each other, but neither is inside the target range.

The weighted median, another underlying measure, rose 1.0 percent in the quarter and 3.6 percent over the year, slightly below its forecast. Taken together, the suite of measures points in one direction: price pressures did not level off in the September quarter, as some had hoped, but picked up again. That is the core of the case for a further tightening, and it is why the October 28 release carried so much weight ahead of the November meeting.

Inflation remains above the target range, and the next decision will test how much patience the Reserve Bank has left.

Inflation remains above the target range, and the next decision will test how much patience the Reserve Bank has left.

Why a November Hike Is Now Expected

The cash rate currently stands at 4.60 percent after the Reserve Bank raised it by 25 basis points on September 29, the fourth increase of 2026. In its September decision, the Board said some of the upside risks to inflation it had flagged in August were materialising, and it left the door open to raising rates further if needed. The October inflation data gave that warning fresh force.

Reserve Bank Governor Michele Bullock has said inflation remains far too high, that domestic demand continues to exceed the economy’s supply capacity, and that upside inflation risks are materialising. Deputy Governor Andrew Hauser said on October 21 that the inflation outlook looks materially worse than the Bank projected in August, describing the Board as facing hard choices. Those remarks, made before the inflation release, already pointed towards a tighter stance; the data then confirmed the direction of travel.

After the release, all four major banks expected a hike on November 3, taking the cash rate to 4.85 percent. Commonwealth Bank and NAB moved from expecting a hold to expecting a hike, while ANZ and Westpac maintained their hike forecasts. Those are economists’ forecasts, not decisions, and the Reserve Bank itself has committed to no November outcome. But the shift in bank forecasts is itself a signal of how the market read the numbers: the Australian dollar rose immediately after the data, a sign that traders were pricing in a higher chance of tightening.

The Jobs Picture Complicates the Call

The rate decision is not only about prices. Unemployment rose to 4.7 percent in September, and employment fell by 39,300 in the month, although the Australian Bureau of Statistics has flagged that monthly figures may be affected by survey changes. That softer jobs picture is one reason some had argued for a hold: raising rates into a weakening labour market risks slowing the economy further. Bullock, however, has said labour market conditions appear tighter than the Bank had previously estimated, a reading that weakens the case for waiting.

Central banks elsewhere were not all moving the same way in the same week. The United States Federal Reserve held its benchmark rate steady on October 28, while Pakistan’s central bank raised its policy rate as it dealt with its own inflation pressures. New Zealand’s central bank, by contrast, unexpectedly held its official cash rate at 2.75 percent in a closely contested vote. Each bank is answering its own domestic conditions, and Australia’s conditions, on the October data, point towards tightening rather than patience.

• Headline CPI rose 1.3 percent in the September quarter; annual inflation reached 4.3 percent, up from 4.0 percent in August.
• Quarterly trimmed mean inflation rose 1.0 percent in the quarter and 3.7 percent over the year, above forecasts and above the Reserve Bank’s August projection.
• The monthly trimmed mean indicator held at 3.6 percent over the year to September; the weighted median rose 3.6 percent over the year.
• The cash rate stands at 4.60 percent after the September 29 increase, the fourth hike of 2026.
• All four major banks now expect a rise to 4.85 percent on November 3, but that remains a forecast until the Board decides.
• Unemployment rose to 4.7 percent in September, complicating the case for further tightening.

What It Means for Households

For Australian households, another rate rise would mean higher borrowing costs on top of an already elevated cash rate. Mortgage repayments, already reset higher by four increases this year, would face further upward pressure if banks pass a November increase through in full, and the cost of other variable-rate borrowing would rise with it. Savers, by contrast, could see deposit rates edge higher, although the benefit for savers is usually slower and smaller than the cost for borrowers.

The broader context matters too. Australia’s cost-of-living pressures are not abstract: the inflation data reflect prices households actually pay, and a 4.3 percent annual rate means the purchasing power of wages is still being eroded faster than the Reserve Bank’s target allows. That is why the November decision carries political as well as economic weight, even though the Bank sets rates independently. Industrial disruption in Australia this week is a reminder that households and businesses are already feeling pressure from several directions at once.

What to Watch Next

What to watch next is only what this article has already set out: the Reserve Bank’s November 3 decision and whether it follows the major banks’ forecasts with a rise to 4.85 percent, how the Board explains its choice given the conflicting signals from inflation and jobs, and whether the monthly inflation indicators in the months ahead confirm that price pressures are still rising or finally begin to ease. Until November 3, the picture is the one the October 28 data painted: inflation above target, underlying pressures picking up, a cash rate already at 4.60 percent, and a central bank running out of reasons to wait.