Today’s CPI print should put an end to any remaining notions that the RBA should hold next week as inflation continues to move in the wrong direction.
For September 2026:
⛽ Headline CPI was 4.4% YoY (⬆️ 0.5%) ⛽ Trimmed mean was 3.6% YoY (⬆️ 0.1% on a revised August) ⛽ Tradables was 4.0% YoY (⬆️ 1.2%) ⛽ Non-tradables was 4.5% YoY (⬆️ 0.6%) ⛽ Services was 4.1% YoY (⬆️ 0.4%)
It’s pretty clear that inflation is out of control and the tightening to date hasn’t been enough to tame rising prices.
While overseas factors, including energy prices, are driving some of the inflation (tradeable or imported inflation took a big jump), domestic prices growth (non-tradables) was also up. Services prices, which also reflect domestic price pressure also grew strongly. This isn’t just a high petrol prices problem.
While growth and employment have softened, there’s no sign yet that they’ve slowed enough to bring inflation down, which leave the RBA in the unfortunate position where inflicting more pain with higher rates is the only path out of this mess.
Markets are now pricing in a hike next week at around 88% likely (which feels a little low to me given the RBA’s recent public comments and this print) and the focus now need to be on December, and whether they need to go again before Christmas.