A day after the Reserve Bank raised the cash rate to 4.60 per cent, new figures showed inflation moving in the wrong direction. Annual inflation rose to 4.0 per cent in the year to August, up from 3.5 per cent in July. For anyone with a mortgage, the obvious question is whether that means another rise in November. Here’s the plain-language guide.
What the Numbers Show
The Australian Bureau of Statistics reported that consumer prices rose 4.0 per cent over the 12 months to August 2026. Economists had expected 4.1 per cent, so it was slightly better than feared, but still well above the Reserve Bank’s 2 to 3 per cent target.
Housing was the biggest contributor, up 5.7 per cent, driven by the cost of new homes and electricity. New dwelling prices rose 5.4 per cent as builders passed on higher costs for materials and labour. Transport was close behind, up 5.6 per cent, with fuel prices jumping 14.8 per cent in August alone.
Why the Trimmed Mean Matters More
The Reserve Bank pays closest attention to the trimmed mean, a measure of underlying inflation that strips out the biggest price swings, such as fuel and electricity in August. That measure was 3.6 per cent, unchanged for the third month in a row.
That’s both good and bad news. It suggests the jump in headline inflation was driven largely by volatile items rather than a broad acceleration. But underlying inflation is also not falling. Some economists point out that over the past six months, the trimmed mean has been running at an annualised pace of around 3.9 per cent, which is not the direction the RBA wants.
So Will Rates Rise in November?
Opinion is split. Some economists read the steady trimmed mean as a reason for the Reserve Bank to wait and see how September’s rise flows through. Others argue stubborn underlying inflation means another rise is still a real possibility, and the RBA itself has said it will raise rates again if it needs to.
The next key data point is the September inflation figure, due on 28 October, less than a week before the RBA’s next decision on 3 November. That release will carry a lot of weight.
What It Means for You
If you have a variable rate mortgage, plan as though another rise is possible rather than counting on rates falling soon. On a $600,000 loan, each 0.25 percentage point rise adds roughly $98 a month. It’s also a good moment to ask your lender for a better rate, since the difference between rates can be larger than a single rise.
If you’re buying, factor rate risk into how much you borrow. Lenders already test your repayments at least 3 percentage points above your actual rate, but your own budget is what matters most.
For everyone, the fuel and power bill pain behind this number is real. If you’re struggling with energy costs, check whether you’re eligible for state energy rebates or concessions. This is general information, not financial advice.
The Bottom Line
Inflation rose to 4.0 per cent in August, driven by housing and fuel, while the RBA’s preferred underlying measure held at 3.6 per cent. That keeps a November rate rise possible but not certain, with the 28 October inflation release likely to decide it. Budget for the possibility of another rise rather than relief.
Epik Wire covers the property market and cost of living in plain language. Subscribe to our newsletter to stay informed.
