Yesterday’s inflation report from the ABS showed consumer prices rose 1.3% in the September quarter, pushing annual inflation to 3.2%, above the Reserve Bank of Australia’s (RBA) 2–3% target band. Economists had expected a softer result, so this was a surprise.

What happened?

  • Housing costs surged, with council rates and charges up 6.3%, the biggest jump in over a decade.
  • Electricity prices climbed 9%, partly due to timing of rebates.
  • Travel costs also rose, driven by strong holiday demand.

Why it happened?

Persistent price pressures in housing and services, combined with energy costs, outweighed easing in rents and insurance.

What was expected?

Markets were pricing in a possible rate cut by the RBA next week. That expectation has now evaporated.

What’s next?

The RBA is likely to hold rates steady at 3.6% for the rest of the year. Major banks now expect the next rate cut cycle to begin in mid-2026.

“The latest CPI figures are too high for the RBA to be comfortable cutting rates next week,” says Diana Mousina, Deputy Chief Economist at AMP. Shane Oliver from AMP adds that inflation’s stickiness means “patience will be required before rate relief returns.”

Impact on Investments

  • Fixed income (bonds): Higher inflation erodes real returns, generally negative for bond prices.
  • Equities: Companies with strong pricing power can weather inflation; others may face margin pressure.
  • Property & real assets: Often benefit as rents and values tend to rise with inflation, where economic conditions allow.
  • Commodities: Typically perform well during inflationary periods.

Overall, higher inflation can be a mixed bag for portfolios—negative for cash and fixed income, but potentially positive for real assets and select equities.

Want to discuss what these inflation numbers mean for interest rates or your portfolio? Contact our advisers at Benjamin King Money Wealth today.

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