Hotter-than-expected inflation print puts mortgage holders on alert ahead of RBA decision
Inflation is still running hot in Australia, with annual prices rising more than economists expected and the Reserve Bank of Australia’s (RBA) preferred core measure also climbing.
The 1.3% quarterly inflation rise was substantially higher than the previous quarter’s 0.6%, while the 4.3% year-on-year rise outpaced the 4.2% consensus forecast, per the Australian Bureau of Statistics (ABS). The RBA’s favourite metric to watch – trimmed mean – rose to 3.6% on a year-on-year basis, matching expectations and outpacing last month’s 3.5% result.
It comes less than a week before the RBA’s 3 November meeting, putting a fifth rate rise this year firmly in play.
Fuel remains the biggest driver. Higher world oil prices pushed petrol costs up sharply in September, making transport the fastest-rising part of the household budget.
But the pressure is not confined to the bowser. Electricity, new homes and rents all kept climbing, and prices rose in every capital city. That breadth is what concerns the RBA: it suggests higher costs are spreading through the economy rather than fading.
Will the RBA raise rates in November 2026?
Markets think a fifth rate rise is on the way, with current market pricing implying a 69% chance of a hike at next week’s meeting.
The RBA has already lifted the cash rate four times this year, most recently on 29 September, when it pushed the cash rate to a 15-year high of 4.6%.
RBA Governor Michele Bullock was appearing before the Senate Economics Legislation Committee as today’s figures landed. Her position has been clear for weeks: “Inflation is too high,” she said in her opening statement to the House economics committee on 18 September. Wednesday’s data gives her little reason to soften that view.
The case for waiting has not disappeared. A softening jobs market alongside the RBA’s hawkish stance gives the board a reason to pause, and AMP chief economist Shane Oliver told MPA in September that rates had probably peaked, while warning the risk of another hike remained high.
What it means for mortgage holders and brokers
For borrowers, relief looks further away than many had hoped. Even if the RBA holds next week, inflation this persistent makes near-term rate cuts hard to justify.
Brokers are already seeing the effect. As covered in MPA’s report on how brokers and economists see the rate peak, first home buyers are trimming their price ranges and investors have stepped back.
A November hike would bring a fresh round of serviceability reassessments, refinance reviews and hardship conversations heading into Christmas.
