Inflation figures are out for August 2026 and they clearly justify the RBA’s hike yesterday.
For August 2026:
⛽ Headline CPI was 4.0% YoY (⬆️ 0.5%) ⛽ Trimmed mean was 3.6% YoY (➡️ unchanged) ⛽ Tradables was 2.9% YoY (⬆️ 1.2%) ⛽ Non-tradables was 4.5% YoY (⬆️ 0.1%) ⛽ Automotive fuel rose 14.8% MoM ⛽ Electricity was 13.2% YoY (⬆️ 7.1%)
This is a pretty grim print with a big jump in headline inflation and no improvement in the RBA’s preferred trimmed mean measure. While it’s easy to dismiss this print as just a reflection of rising electricity prices (due to the end of subsidies) and rising fuel (due the end of subsidies and wars overseas), that’s an overly simplistic take.
Both of these are key inputs to the cost of almost everything else and they are also key factors in how households experience inflation and set their inflation expectations. This makes it more important to be proactive through an energy crisis to both soften the flow through to prices (through reduced demand) and help keep inflation expectations anchored.
The other key issue for Australia is domestic inflation continues to run too hot. Non-tradable prices were up 4.5%YoY. For a long time now, underlying domestic inflation pressure has been masked by very low tradables inflation. With that trend unwinding, its important that we get domestic prices under control.
We get another CPI print and wealth of other data before the RBA needs to make a decision again, but its already looking like another hike should be on the agenda in November.