Australia's inflation climbs to 4% in August as fuel surge defies run of rate hikes

Australia’s inflation accelerated in August as surging fuel costs and broad-based price pressures showed little sign of easing, a day after the Reserve Bank of Australia raised interest rates to a 15-year high.

The Australian Bureau of Statistics reported on Wednesday that the monthly consumer price index rose 0.4% in August, slightly below forecasts of 0.5%. The annual pace pushed higher to 4.0% from 3.5%, well above the RBA’s 2% to 3% target band.

Automotive fuel prices jumped 14.8% month-on-month, driven by higher world oil prices and the unwinding of the federal government’s temporary fuel excise relief. Housing was the largest contributor to annual inflation at 5.7% year-on-year, with new dwelling prices up 5.4% and electricity prices up 13.2%. Transport was the second-largest contributor.

The trimmed mean measure of core inflation — the RBA’s preferred gauge — held steady at 3.6% for a third straight month, showing no slowdown since the central bank began its tightening cycle in February.

Rachael McCririck, the ABS’s head of price statistics, said builders were passing higher material and labour costs on to consumers. Harry McAuley, an economist at Oxford Economics Australia, said sustained high oil prices were “bleeding through prices beyond the pump” and expected the pressure to continue into 2027.

On Tuesday, the RBA lifted the cash rate to 4.6%, its fourth hike this year for a full percentage point of tightening. Governor Michele Bullock warned the bank was ready to raise further if needed.

Sources

• Reuters: “Australia inflation stubbornly high in August, defying run of rate hikes” — https://www.reuters.com/world/asia-pacific/australia-inflation-stubbornly-high-august-defying-run-rate-hikes-2026-09-30/
• AAP: “Headline inflation jumps back to four per cent” — https://aapnews.aap.com.au/news/rba-to-scrutinise-unfortunate-inflation-data-after-hike