Australia Inflation Slows but Remains Above Target
Australia’s inflation rate showed signs of easing in September 2026, according to the latest data from the Melbourne Institute Monthly Inflation Gauge. The gauge rose by just 0.3% month-on-month, down from a 0.5% increase in August and marking the slowest pace since June. This moderation suggests that the Reserve Bank of Australia’s (RBA) tighter monetary policy, including three cash rate hikes since the start of the year, is beginning to curb price pressures.
Despite the slowdown, inflation remains elevated, with annual inflation accelerating to 4.0% in August from 3.5% in July. This marks the highest annual inflation rate in three months, still surpassing the RBA’s target range of 2-3%. The data indicates that while inflationary pressures are easing, they remain a concern, with some upside risks emerging.
The economic outlook remains uncertain, with weak productivity growth continuing to limit potential output. Additionally, the potential impact of the housing market downturn adds to the risks, making it difficult to predict the future trajectory of inflation and economic activity.