Key takeaways
Headline inflation is holding at 3.8%, and underlying inflation has risen to 3.4%, still above the RBA’s 2–3% target band.
Energy costs are driving much of the pressure. The expiry of government electricity rebates and volatile global oil prices are pushing up household costs and keeping inflation elevated.
Interest rate cuts are unlikely anytime soon. If underlying inflation remains above target, the RBA may keep rates higher for longer, with some banks even forecasting another rate rise.
Wage growth isn’t solving the cost-of-living squeeze. Average earnings are rising around 4–4.5%, but much of that reflects workforce changes, and real purchasing power remains under pressure.
Property markets remain resilient despite the noise. Auction clearance rates have softened amid higher listings, but strong fundamentals and limited supply are still supporting capital city housing marke
Inflation is making a comeback.
Just when many Australians were starting to breathe a little easier, the latest data suggests the fight against inflation isn’t over yet.
And if inflation is rising again, the big question is… what does that mean for interest rates? And more importantly, what does it mean for our housing markets?
The latest figures from the ABS show annual headline inflation holding at 3.8 per cent, but underlying inflation - the RBA’s preferred measure - ticking up again to 3.4 per cent and still sitting outside the 2 to 3 per cent target range ..
In this week's Property Insider Chat, Dr. Andrew Wilson and I dig into what has actually caused inflation to rise.
We also discuss the latest statistics on average weekly earnings and examine how our auction markets performed amid a surge in listings during the early autumn selling season.
And, as always, we’ll go beyond the headlines and explain what this means for you as a property investor or homebuyer in today’s market.
Watch this week's Property Insider chat as we discuss how Australia’s inflation picture has taken a bit of an unexpected turn.
After a short, but welcome period of moderation, the February monthly inflation data shows headline inflation holding firm at around 3.8% year-on-year, while the RBA’s preferred trimmed mean measure has inched up to about 3.4%.
That’s well above the RBA’s 2–3% target band and a signal that inflation pressures haven’t fully eased.
A big part of this recent stickiness comes from energy costs.
Electricity prices have jumped sharply after federal and state government rebates expired, and annual electricity inflation recently hit the low-30s percentage range, making it one of the largest contributors to the headline figure.
While removing subsidies clearly exaggerates the short-term numbers, it still matter for household budgets and the RBA’s thinking.
Global oil price dynamics have also been a factor. While fuel prices have been relatively volatile, periods of higher global crude prices feed through into petrol costs at the bowser, keeping pressure on transport inflation.
And now, with tension, the war in the Middle East, it's only likely that fuel prices will rise even further, pushing up inflation.
Combined with ongoing rises in other everyday costs like food, rents, and housing services, it seems like inflation will be with us for some time yet.
Obviously, if underlying inflation stalls above the RBA’s target for too long, it strengthens the case for keeping interest rates higher for longer, or even lifting them further.
- Also read:Inflation Is Rising Again – Here’s What That Means for Property Investors | Property Insiders
- Also read:Latest Property Price Forecasts Revealed. Australian Property Market Outlook 2026: Where To Now After The Rate Rise.
- Also read:Booming Housing Markets Rise Over February | Latest stats from Dr. Andrew Wilson
- Also read:National Weekly Auction Report – February 28th 2026 | Clearance Rates Lower Over Super Week of Auctions
- Also read:This week’s Australian Property Market Update – Latest Data, State by State February 24th 2026
Australia's big four banks are all anticipating an interest rate rise in May, but Dr Andrew Wilson believes an interest rate rise in March may be on the cards.
Average weekly earnings – wages vs costs
On the wage front, the latest ABS Average Weekly Earnings data shows earnings continuing to rise, with average weekly total earnings up around 4.0-4.5% year-on-year depending on how you slice the data and adjustment method.
Watch this week's Property Insider chat as Dr Wilson explains that much of this reflects compositional shifts in the labour market - like changes in the mix of full-time, part-time, and high-paid job categories.
In other words, some of the headline wage increases don’t purely represent pay rises for the same workers doing the same jobs, which is what really matters for household purchasing power.
When wage growth doesn’t significantly outpace inflation, or only marginally does, real purchasing power is squeezed.
That’s why many households feel cost-of-living pressure even when wages are rising; goods and services, especially essentials like electricity and housing costs, are absorbing a chunk of any wage gains.
This dynamic is central to the RBA’s inflation outlook too: if sustained wage growth starts to feed into consumer price inflation (wage-price spirals), that’s when the central bank gets more worried.
Right now, wage growth is solid but not spectacular enough to be a runaway inflation driver, but it’s enough to keep discussions around monetary policy finely balanced.
Auction markets - clearance rates lower over super week of auctions
As always, Dr Andrew Wilson and I discussed how our auction markets performed, particularly over the last weekend, where there was a surge of new listings.
Capital city auction clearance rates were generally lower over the past week, as the usual early autumn selling season super surge of auctions provided more choices for buyers and more competition for sellers.
The national weekend auction market reported an average clearance rate of 65.7% over the past week, which was well below the 70.7% reported over the previous week, but higher than the 62.6% reported over the same week last year.
High auction listings over the past week have challenged buyer depth, particularly in Melbourne, amid the usual pre-Labour Day holiday auction flood. Overall auction numbers will be lower over the coming weeks due to holiday distractions.
What It All Means
So where does this leave us?
Inflation isn’t dropping back into the RBA’s target zone yet. Energy cost adjustments, housing services, and everyday essentials are keeping price rises alive, which the RBA is watching closely.
At the same time, wage growth is decent, helping households, but not dramatically outpacing inflation.
Meanwhile, Australian property markets are still moving forward, with the latest end-of-month statistics showing strong growth in many of our capital city markets in February.
An important takeaway for property investors and homebuyers is not to panic at short-term noise but instead understand the structural backdrop of the strong fundamentals still underpinning our housing supply markets.
This means for home buyers and investors who are finance ready and have secure jobs, there's currently a window of opportunity to get into the markets, while others are sitting back waiting for more clarity.
