Australia Inflation Gauge Accelerates Ahead of RBA Meeting

Australia’s Melbourne Institute Monthly Inflation Gauge rose 0.5% month-on-month in October 2026, up from a 0.3% increase in the previous month and marking a fourth straight monthly gain. The stronger reading highlights persistent price pressures ahead of the Reserve Bank’s policy meeting later this week, where markets widely expect a fifth rate hike this year. Annual headline inflation accelerated to a six-month high of 4.3% in September, remaining well above the RBA’s 2-3% target range. RBA Governor Michele Bullock has cautioned that inflation may stay elevated longer than anticipated, while Assistant Governor Sarah Hunter recently indicated policymakers have “not quite yet” done enough to return inflation sustainably to target, reinforcing expectations of further policy tightening.

Australia’s Melbourne Institute Monthly Inflation Gauge rose 0.3% month-on-month in September 2026, slowing from a 0.5% increase in the previous month and marking the softest reading since June. The moderation suggests that tighter monetary policy is helping curb price pressures, with the three cash rate increases since the start of the year tightening financial conditions as economic activity slows. However, inflation remains too high, with some upside risks materialising. Annual inflation accelerated to 4.0% in August from 3.5% in July, the highest in three months and still above the Reserve Bank of Australia’s 2–3% target range. Meanwhile, weak productivity growth continues to constrain potential output, while uncertainty over the economic impact of the housing market downturn adds to the outlook risks.

Australia’s Melbourne Institute Monthly Inflation Gauge rose 0.5% month-on-month in August 2026, slowing from a 1.0% increase in the previous month and marking the second straight month of growth. The moderation suggested price pressures are moderating from their March peak, although underlying inflation remains elevated. The Reserve Bank of Australia’s August meeting minutes noted that underlying price growth had eased slightly from late 2025 levels, but inflation remained “too high.” Officials also highlighted upside risks from the Middle East conflict, the global AI boom and weak productivity growth. Meanwhile, annual inflation eased to 3.5% in July from 3.8% in June, the lowest in eight months, but remained above the RBA’s 2–3% target range. The central bank expects inflation to return to target only gradually, by late 2027, keeping the outlook for monetary policy cautious.