Inflation jumps to 4.3 per cent

Australia's headline inflation rose to 0.8 per cent in September, taking annual inflation to 4.3 per cent, up from 4 per cent in August.

Housing and fuel drive the rise

Higher housing costs and automotive fuel prices are the main drivers of the increase, according to the latest consumer price index data.

Three factors behind high inflation

Reserve Bank officials point to the Middle East war, the artificial intelligence investment boom, and weak productivity as driving the current bout of high inflation.

RBA to decide on rate rise

The Reserve Bank board will meet after the weekend to decide whether to raise interest rates for a fifth time this year, based on today's figures.

What inflation actually means

Inflation is the increase in the price of goods and services. The Consumer Price Index, released monthly by the Australian Bureau of Statistics, measures how quickly prices are rising.

Why high inflation hurts households

Higher prices reduce purchasing power. If prices rise faster than wages, your money buys less. Savings also lose value over time if interest rates stay below inflation.

“If you get a 3 per cent pay rise, but prices have gone up 4 per cent, you're going to be worse off.”

The RBA's inflation target

The Reserve Bank targets a low and stable inflation rate between 2 and 3 per cent on average over time. This helps people and businesses plan for the future.

Why some inflation is good

Moderate price growth stops people hoarding cash and spurs economic activity. If prices fall, deflation can freeze the economy and create a spiral of job losses and wage cuts.

Supply and demand drive prices

Prices rise when demand exceeds supply, or when supply costs increase. Inflation expectations also matter: if people expect prices to rise, they buy sooner and businesses raise prices preemptively.

How interest rates fight inflation

The Reserve Bank raises the cash rate, making borrowing more expensive. Higher loan repayments leave households with less to spend, reducing demand and slowing price growth.

Rate rises affect savings and assets

Higher rates encourage saving and discourage spending. They also lower asset prices like stocks and housing, making people feel less wealthy and less likely to spend money.

Exchange rates and imported goods

Higher Australian interest rates lift the currency's value, making imported goods cheaper. More overseas consumption can ease pressure on the domestic economy.