Australia’s consumer inflation expectations climbed to 5.0% in February 2026, up from 4.6% in January, reaching their highest level since July 2023. The increase came on the heels of the Reserve Bank of Australia’s decision to raise the cash rate by 25 basis points to 3.85% at its first policy meeting of the year, marking the first rate hike since November 2023.
Policymakers cited a resurgence in cost pressures that intensified in late 2025, largely driven by higher service costs and a tight labor market. The central bank signaled that inflation is likely to remain above its 2–3% target band for an extended period, with both headline and core inflation still exceeding target. Officials indicated they stand ready to take additional measures to rein in price growth.
Current projections suggest that inflation in Australia may not return to within the target range until mid-2027.
