Inflation hits 4.3%, RBA says it remains 'too high'

Australia's inflation rose to 4.3% in the 12 months to September, according to the latest data from the Australian Bureau of Statistics (ABS).

Trimmed mean inflation came in at 3.6%, up from a revised 3.5% in the 12 months to August.

Speaking at the Senate Economics Legislation Committee today, Reserve Bank of Australia (RBA) deputy governor Andrew Hauser said inflation remains "too high".

"These numbers are broadly in line with market expectations and candidly where we thought it will be as well," Hauser said.

"These are too high, we have said that repeatedly, and I am sure that we will say that again today."

Both headline and trim mean numbers have been above the RBA target band of 2% to 3% for 14 months now.

ABS head of price statistics Rachael McCririck said housing was the largest contributor to annual inflation in September, rising by 5.2%.

"Annual inflation of 5.2% for housing reflected rising costs for both new dwellings and electricity," McCririck said.

"New dwelling prices rose 4.7% in the 12 months to September as builders passed on higher costs for materials and labour. This is down from 5.4% in the 12 months to August."

MLC senior economist Bob Cunneen said borrowers should brace themselves for another interest rate rise as early as Melbourne Cup Day on November 3.

Cunneen added higher petrol and diesel prices were a key driver of inflation in September, with both the Iran war and the Russia-Ukraine war intensifying and further constraining global oil supplies.

On a monthly basis, the ABS reported that automotive fuel prices rose to 9.4% in September, compared to a rise of 14.8% in August, driven by higher world oil prices.

"Inflation remains elevated and some of the upside risks flagged in August are materialising," Cunneen said.

"The conflict in the Middle East has broadened and global energy prices are now much higher than had been assumed in the August forecasts. AI-related demand is driving rapid growth in global prices for technology-related goods. And there remains pressure on domestic capacity."