Bullock Warns of Rising Inflation Risks as Middle East Conflict Bites

RBA Governor Michele Bullock told the House of Representatives Standing Committee on Economics that inflation has remained above target since picking up in the second half of 2025, with both headline and underlying measures running around or a little above 3.5% over the past year.

The increase partly reflects capacity pressures in the domestic economy, compounded by the conflict in the Middle East, which has lifted inflation directly through petrol prices and indirectly as firms pass higher input costs through to other goods and services.

Bullock said the Board is focused on ensuring that inflation does not become embedded in price and wage-setting behaviour.