HOT INFLATION ON THE RISE; EXPORT FILLIP

Transport, housing costs pushing up inflation rate

Consumer prices in Australia have continued their upward climb, with annual headline inflation rising from four per cent in August to 4.3 per cent in September. The Australian Bureau of Statistics (ABS) said higher transport costs (up by 8.7 per cent) and housing (5.2 per cent) contributed to higher 12-month inflation. Underlying annual inflation, which excludes volatile items, rose slightly to 3.6 per cent – still well above the Reserve Bank of Australia’s preferred inflation target of 2-3 per cent. Headline inflation was last under three per cent in June 2025. Across Australia, the Consumer Price Index varied widely, recording annual inflation from four per cent in Melbourne to 5.3 per cent in Hobart. Adelaide and Darwin also recorded inflation rates of five per cent or higher in September.

Rising gas, coal, cereals demand lifts export prices

Rising gas prices bolstered Australian commodity export prices in the September quarter, complemented by higher coal and cereals prices, according to latest ABS figures. International trade price indices show that natural and manufactured gas export prices rose more than 28 per cent, helping to lift the export price index by 1.4 per cent in the quarter, and by 6.3 per cent over the full year.  Rising metallurgical coal prices lifted coal export prices by almost five per cent, while production disruptions in Ukraine and Russia contributed to a 5.7 per cent rise in cereals. Import prices rose by 1.1 per cent in the quarter and by 5.5 per cent over the year, with a 7.3 per cent lift in prices over the quarter on office equipment and technology for data centres and cloud computing.

Labor beefs up laws to protect Defence assets

The Albanese Government has introduced legislation to modernise the protection of Defence bases, personnel and critical assets, including enhanced powers to detect uncrewed systems, commonly known as drones. Deputy Prime Minister Richard Marles said the legislation would also assist the Defence Force to develop, test and introduce advanced capabilities more efficiently in Australia. He said the reforms to the Defence Act 1903 were critical to implement the National Defence Strategy and to progress work on Pillars I and II of the AUKUS partnership. The Deputy PM said the legislation would provide Defence with an enduring legislative authority to conduct counter-measures against uncrewed systems (known as UXS, or drones) over sensitive Defence sites. This would include the ability to detect, identify, monitor, track and where necessary, take action against UXS devices.

PM doubles down on economic benefits of EU free trade deal

Prime Minister Anthony Albanese said a free trade agreement with the European Union would boost Australia’s economy by $10 billion, including through a significant increase in beef and sheepmeat exports. The PM said an EU free trade deal would make Australian exports of goods and services 98 per cent tariff-free to a market of 450 million. He warned that a failure by Australia to strike a free trade deal would deprive the nation of a comparative advantage enjoyed by countries like New Zealand. In particular, Mr Albanese stressed the importance of Australia’s comparative advantage in the export of critical minerals under an agreement with the EU.

Higher tax take lowers quarterly budget deficit

Australia’s progressive budget position finished ahead of official forecasts for the September quarter, thanks to higher taxation revenue and lower payments. Financial statements released by Finance Minister Katy Gallagher show an underlying cash deficit of $14.5 billion for the first three months of 2026-27, well under the original Budget forecasts of a $25.1 billion deficit for the same period. Receipts were $6.8 billion higher than forecast, and payments were $3.8 billion lower; taxation revenue was $4.6 billion ahead of expectations. The Federal Budget projected an underlying cash deficit of $31.5 billion for 2026-27.

Black coal, natural gas dominate domestic energy output

Black coal remained the dominant source of Australian domestic energy production, but renewable energy production increased by almost 10 per cent, according to official estimates for 2024-25. A survey of energy production by the ABS showed that 10,607 petajoules (PJ) of black coal accounted for more than half of domestic energy sources, but 92 per cent of black coal was exported. Natural gas contributed 5,669 PJ, of which 77 per cent was exported as liquefied natural gas (LNG). A total of 372 PJ of renewable electricity was produced in 2024-25, with solar energy up by 11 per cent and wind energy up by 15 per cent. While energy exports decreased by 3.1 per cent to 17,363 PJ and industry energy net use fell by 1.2 per cent, household energy use rose slightly.