Australia's inflation rate climbs to 4.3%. Here's why

Australia's inflation rate is 4.3%. That's how much consumer prices rose in the 12 months to September 2026, according to the Australian Bureau of Statistics, up from 4.0% in the 12 months to August. A year earlier it was 3.6%, and in mid-2025 it had dropped close to 2%.

The Reserve Bank's job is to keep inflation between 2 and 3 per cent. It's now well above that, and the Reserve Bank has raised interest rates four times this year to try to bring it down.

‹ 1 / 7 ›

Why Australia's inflation is rising again

The ABS breaks the price rises down by category. Over the 12 months to September 2026, petrol and electricity were the biggest rises in household bills, and the ABS puts the electricity rise down to government relief coming to an end.

Fuel: up almost a quarter in a year. Petrol and diesel prices were up 23.6% in a year, and 9.4% in September alone, which the ABS says was "driven by higher world oil prices". That came on top of a 14.8% jump in August, when the ABS also pointed to the end of the last of the federal government's fuel excise relief.

Fuel prices in Tolland, Wagga Wagga, in March 2026. Photo: Bidgee, CC BY-SA 3.0 AU, via Wikimedia Commons.

Power bills: the rebates ended. Electricity prices rose 12.8% in a year. In the ABS's words, the rise "is largely due to the ending of Commonwealth electricity rebates over the year". As we explained in why power bills are bigger even though prices "fell", the rebates paid part of the bill rather than making power cheaper. Now that they're gone, households pay all of it, and the inflation figures show it.

The other side of that: while the relief was in place, it held measured prices down. So part of this year's rise is that relief unwinding, not prices suddenly getting worse.

Council rates and insurance. Council rates and charges rose 5.6%, which the ABS says reflects higher general rates and "increases in various levies and charges, such as waste disposal levies". Insurance rose 5.4%: see why car insurance premiums are up 42%.

Housing. The cost of new homes rose 4.7%, which the ABS says was builders "raising base prices to pass through higher labour and materials costs". Rents rose 3.6%, unchanged since May.

The Reserve Bank adds a bigger picture. When it raised rates in September, it said the conflict in the Middle East had broadened and that "global energy prices are now much higher than had been assumed in the August forecasts". It also said that "AI-related demand is driving rapid growth in global prices for technology-related goods", and that "there remains pressure on domestic capacity" in Australia. Not all of the energy squeeze is global, though: Australians pay export prices for the gas left after three-quarters of east coast gas is shipped overseas.

Underlying inflation is rising too

Petrol prices swing a lot, so the Reserve Bank also watches trimmed mean inflation, which leaves out the biggest price rises and falls each period. It's the Reserve Bank's preferred measure of underlying inflation, and it's going the wrong way:

• Monthly: 3.6% in the 12 months to September, up from 3.5% in August.
• Quarterly: up 1.0% in the September quarter alone, and 3.7% over the year, up from 0.8% and 3.6% in the June quarter.

In August, the Reserve Bank forecast that trimmed mean inflation would ease to 3.3% by December 2026. In the September quarter it was 3.7%, and rising.

Australia's inflation rate by year

According to the ABS's quarterly figures, inflation peaked at 7.9% in the year to the December quarter of 2022, fell to 2.1% by the June quarter of 2025, and has climbed back since.

Since the end of 2019, prices have risen 28.4% in total (an Aussie Outrage calculation from the ABS consumer price index: 80.70 in the December quarter of 2019, 103.64 in the September quarter of 2026). What cost $100 before COVID costs about $128 now.

Australia's inflation compared to other countries

Australia's inflation is now high for a rich country. In August 2026, the latest month the OECD has compared, consumer prices in Australia rose 4.0% over the year, against 3.1% across the G7 economies and 3.2% in the euro area, according to the OECD's consumer prices release of 6 October 2026.

Of the 38 OECD countries, seven had higher inflation than Australia in August 2026: Türkiye, Colombia, Lithuania, Iceland, Spain, Chile and New Zealand (June quarter for New Zealand), with Belgium level at 4.0% (an Aussie Outrage calculation from the OECD's table). The OECD average of 4.3% is pulled up by Türkiye, where prices rose 31.5%.

The International Monetary Fund expects the same in its forecasts. In its World Economic Outlook of October 2026, the IMF forecasts Australia's inflation to average 3.9% in 2026, against 3.1% for advanced economies as a whole. Of the 43 economies the IMF classes as advanced, only seven are forecast higher: Iceland, Lithuania, Bulgaria, Croatia, Greece, New Zealand and Andorra. For 2027 the IMF forecasts 3.1% for Australia, still above the top of the Reserve Bank's target, and 2.7% for advanced economies.

It's not just petrol

Energy prices jumped in most rich countries in 2026, and the OECD notes Australia was one of six countries where energy inflation rose by more than 5 percentage points in August alone. Here, the ABS points to fuel excise relief and electricity rebates coming to an end. But across the G7, energy inflation was even higher, at 14.0%, according to the OECD.

What sets Australia apart is the rest of the shopping basket. Leave out food and energy, and prices in Australia rose 3.5% over the year to August 2026, according to the OECD's figures. That's higher than in every G7 country, and well above the G7's 2.3%. This fits what the Reserve Bank said in September: that "there remains pressure on domestic capacity".

Source: OECD, Consumer Prices, 6 October 2026, Table 1. New Zealand: June quarter 2026. Australia's "since December 2019" figure runs to the June quarter of 2026. The US figure without food and energy is an OECD estimate, and Australia's uses the ABS's own categories.

Over the whole period, Australia is in the middle

The comparison since COVID looks different. Prices in Australia rose 28.0% from December 2019 to the June quarter of 2026, according to the OECD. That's close to the G7's 26.9% and less than in New Zealand (31.5%, also to June), the United States (30.4%) or the United Kingdom (32.2%), whose figures run two months longer, to August 2026.

In 2022, the worst year, Australian prices rose 6.6% on average, against 7.3% for advanced economies, 8.0% in the United States and 9.1% in the United Kingdom, according to the IMF. The difference is now: in 2026, Australia's inflation is higher than in most of them.

Prices vs wages

Wages are rising more slowly than prices. The ABS Wage Price Index rose 3.2% over the year to the June quarter of 2026, while prices rose 3.9% over the same year. When prices rise faster than pay, the same pay packet buys less. The September quarter wage figures are due in mid-November; prices rose 3.9% over that quarter's year too.

Inflation and interest rates

High inflation is why the Reserve Bank keeps raising interest rates. It lifted the cash rate four times in 2026, to 4.60% in September, saying it "will continue to do what it considers necessary to bring inflation sustainably back to target". For people with a mortgage, that's a second hit on top of higher prices.

Higher rates reach the government too: the Reserve Bank noted in March and May that government bond yields had risen. See how much interest is paid on Australia's national debt.

When the next figures come out

The ABS publishes the consumer price index monthly, usually on the last Wednesday of the month, at 11:30am (Canberra time). The next releases are:

• 25 November 2026: October 2026
• 6 January 2027: November 2026

From February 2027, the ABS will publish on the fourth Wednesday of each month instead. We update this page when each release comes out.

Inflation isn't the weather. Part of this year's rise came from relief ending, a decision made in Canberra, and households are now paying the full cost at the bowser and in their power bills.

Top photo: fuel prices at a service station in Brisbane, March 2026. Photo: Chris Olszewski, CC BY-SA 4.0, via Wikimedia Commons.