Inflation moves further above target
The Australian Bureau of Statistics (ABS) reported on 28 October that the CPI rose 4.3% in the 12 months to September, up from 4.0% in the 12 months to August. The ABS said the quarterly movement for the CPI was 1.3%. Trimmed mean inflation, which the ABS uses to look through the most volatile price changes, was 3.6% in the 12 months to September, as published in the ABS's monthly CPI release.
The ABS said housing was the largest contributor to annual inflation in September, rising 5.2%, with transport the second largest. Automotive fuel was 23.6% higher over the year, and the ABS said this was driven by higher world oil prices. The ABS said the annual rise of 12.8% in electricity costs is largely due to the ending of Commonwealth electricity rebates over the year. For readers watching construction costs, new dwelling prices rose 4.7% in the 12 months to September, slower than the 5.4% recorded for the 12 months to August. Rental prices rose 3.6% in the 12 months to September.
The Reserve Bank's cash rate target has been 4.60% since 30 September, following the Board's 29 September decision. The Board meets on 2 and 3 November, and the RBA says the outcome is announced at 2.30pm on the second day of the meeting. Savings.com.au reported on 30 October that all four major banks now expect a 25 basis point rise to 4.85% at that meeting, and that CBA and NAB changed their earlier hold calls after the CPI data. These are bank forecasts, not a confirmed outcome.
A softer labour market
Unemployment was 4.7% in September on the ABS seasonally adjusted measure, and the trend rate was 4.6%. Employment fell by 39,300 people, and the participation rate dipped to 66.8%. The ABS recommends trend data for the underlying picture, which showed employment still edging up by 0.1%.
Sentiment slides after the rate rise
The Westpac-Melbourne Institute Consumer Sentiment Index fell 4.7% to 80.4 in October. Westpac said respondents interviewed after the 29 September decision scored 67.2, compared with 86.9 for those surveyed before it. Average pump prices were above $2.30 a litre, and more than 80% of consumers expected mortgage rates to rise over the next year.
NAB's September business survey showed confidence falling 4 points to -13, the third monthly decline, while conditions were unchanged at -1. NAB said the employment index fell to its lowest level in five years, and it pointed to higher interest rates, global uncertainty and elevated fuel and diesel costs. New South Wales conditions were at 0 and Victoria's were at -3.
Housing values and activity
Cotality's Home Value Index, published on 1 October, showed national values fell 1.1% in September, the sixth consecutive monthly decline. National values are 5.2% below the March peak, and 97% of capital city suburbs recorded a fall over the three months to September.
Sydney values fell 1.4% in the month and are 7.0% lower than a year ago and 8.6% below the February peak. Melbourne fell 0.7%, is 6.2% lower over the year and sits 7.2% below its November 2025 high. Brisbane recorded the sharpest monthly fall among the capitals at 1.5%.
Cotality's figures show more stock and slower sales. Total advertised stock across the capitals was 23.1% higher than a year ago, even though new listings were 9.2% lower. Capital city homes took a median of 39 days to sell, compared with 23 a year earlier, and sales volumes over the past three months were 19.1% lower than a year ago.
The RBA's minutes for the September meeting said new housing loan commitments had fallen sharply, led by lending to investors. On the supply side, the ABS counted 16,953 dwelling approvals nationally in August, down 6.1% for the month. Approvals for dwellings other than houses, a group that includes apartments and townhouses, fell 21.2% to 5,674. New South Wales approvals fell 17.3% to 3,896.
What to watch next
The RBA decision on 3 November arrives with the Board's quarterly forecasts. Cotality's October index follows in early November and will show whether the run of monthly declines continues.
General information only, not financial or credit advice.
Sources
- ABS, Consumer Price Index, Australia, September 2026 (monthly release; quarterly data in Tables 17 and 18): https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/sep-2026
- ABS, media release "CPI rose 4.3% in the year to September 2026": https://www.abs.gov.au/media-centre/media-releases/cpi-rose-43-year-september-2026
- ABS, Labour Force, Australia, September 2026: https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/sep-2026
- ABS, Building Approvals, Australia, August 2026: https://www.abs.gov.au/statistics/industry/building-and-construction/building-approvals-australia/aug-2026
- RBA, Cash rate target history: https://www.rba.gov.au/statistics/cash-rate/
- RBA, 2026 Monetary Policy Board Meeting Dates (media release of 10 February 2025): https://www.rba.gov.au/media-releases/2025/mr-25-02.html
- RBA, Minutes of the Monetary Policy Board meeting, 28-29 September 2026: https://www.rba.gov.au/monetary-policy/rba-board-minutes/2026/2026-09-29.html
- Savings.com.au, All big four banks back November rate hike (30 October 2026): https://www.savings.com.au/news/all-big-four-banks-back-november-rate-hike
- Westpac IQ, Consumer Sentiment, October 2026: https://www.westpaciq.com.au/economics/2026/10/consumer-sentiment-october-2026/
- NAB, Monthly Business Survey, September 2026: https://www.nab.com.au/news/economy-markets/triple-squeeze-hits-business-confidence---nab-monthly-business-s
- Cotality, Australian housing values down for sixth straight month in September (1 October 2026): https://www.cotality.com/au/insights/articles/australian-housing-values-down-for-sixth-straight-month-in-september