New data from the ABS shows annual headline inflation rose in expected ways in August but underlying inflation remained stable.
These numbers confirm the overwhelming influence on inflation in August was higher global oil prices.
All of the increase in annual headline inflation was from a combination of higher fuel costs and the unwinding of last year’s energy rebates.
Today’s increase in annual headline inflation follows four consecutive months of moderation.
The re‑escalation of the war in the Middle East is pushing up fuel costs, inflation and interest rates around the world and these numbers show Australia is not immune.
Inflation increased in most major advanced economies in August, most have had a rate rise this month, and all are expecting more to come.
Australians are already under pressure and rising global inflation and interest rates are making this harder.
In the face of heightened global instability, it was particularly encouraging to see headline and underlying inflation moderate in the month.
In monthly terms, headline more than halved and underlying inflation halved.
Today’s result was below the median market expectation but consistent with the increases we’ve seen in inflation around the world.
We already had an inflation challenge in our economy but the conflict is making it worse.
From an economic point of view the conflict can’t end soon enough.
Headline inflation rose 0.4 per cent in August, compared to 1.0 per cent in July. In the year to August, headline inflation was 4.0 per cent. This compares to 3.5 per cent in July.
Trimmed mean inflation was 0.2 per cent in August, down from 0.5 per cent in July. In annual terms, it was steady at 3.6 per cent in August.
Fuel prices rose 14.8 per cent in the month, to be 13.5 per cent higher through the year and contributed 0.4 percentage points to annual headline inflation.
Monthly electricity prices were flat in August following a 1.6 per cent fall in July, but the timing of energy rebates last year meant it was 13.2 per cent higher in through the year terms.
While inflation is higher than we’d like, it remains much lower than what it was earlier in the year and much lower than we inherited.
When we came to office, headline inflation was north of six per cent and rapidly rising, it’s now much lower than that.
Underlying inflation was around five per cent but it is now much lower.
We recognise people are under pressure and yesterday’s interest rate rise will make this harder.
That’s why we’re rolling out responsible cost‑of‑living relief including cutting taxes, more bulking billing, cheaper medicines and supporting higher wages, at the same time as we’re responsibly managing the budget.
New figures out this week showed the budget position in 2025-26 was $6 billion better than expected in May and the deficit was almost half of what we inherited.
We’re not immune from global pressures but we are better placed and better prepared to confront them, with the equal fastest annual growth compared to all major advanced economies, low unemployment, solid wages growth and much stronger public finances.
We’re focused on taking the pressure off Australians and addressing inflation while we build a more productive and resilient economy and manage global uncertainty, and today’s data shows why this is so important.
