FunanceInflation hit 4.0% in August. Electricity alone was up 13.2%.
Annual CPI rose to 4.0% in August 2026, up from 3.5% in July, while the trimmed mean held at 3.6%. Electricity was up 13.2% over the year, largely because the Commonwealth rebates ended. What the two measures mean, and why a rebate ending counts as inflation.
Annual inflation rose to 4.0% in August, up from 3.5% in July. That is the headline from the ABS release on 30 September, the day after the RBA lifted the cash rate to 4.60%.
The single biggest jump in the detail was electricity, up 13.2% over the year. And the ABS is clear about why: it is "largely due to the ending of Commonwealth electricity rebates". Nobody's power company put out a new price list to cause that. A credit stopped appearing on the bill.
That is worth understanding properly, because it explains why two inflation numbers came out on the same day and told different stories.
The August numbers
| Measure | 12 months to August 2026 |
|---|---|
| CPI (headline) | 4.0% |
| Trimmed mean | 3.6% |
| CPI excluding volatile items | 3.7% |
| Electricity | 13.2% |
| Automotive fuel | 13.5% |
| Rents | 3.6% |
Source: ABS, Consumer Price Index, Australia, August 2026.
In the month of August alone, prices rose 0.4%. Fuel did a lot of that work: automotive fuel was up 14.8% in the month, which the ABS puts down to higher world oil prices and the last of the federal fuel excise relief unwinding. Rents, by contrast, have been rising at 3.6% a year since May without much drama.
Headline vs trimmed mean, in plain English
The headline CPI is the full basket. Every expenditure class, weighted by how much households spend on it, averaged together. If petrol jumps, the headline jumps.
The trimmed mean is the same basket with the extremes cut off. The ABS ranks the price movements of all 87 expenditure classes from lowest to highest, removes the top 15 per cent and the bottom 15 per cent by weight, and averages the middle 70 per cent (ABS methodology).
The point of trimming is to ask a narrower question: setting aside whatever spiked or crashed this period, how fast are ordinary prices rising? In August, electricity and fuel were exactly the kind of big movers that get trimmed. So the headline went from 3.5% to 4.0%, and the trimmed mean stayed at 3.6%, where it was in July.
Neither number is the "real" one. The headline is closer to what your bank statement felt. The trimmed mean is closer to what is happening underneath, and it is the measure the RBA asked the ABS to keep producing in quarterly form after the switch to monthly CPI (ABS FAQ).
Why a rebate ending counts as inflation
The CPI measures what households actually pay, not the sticker price before discounts. So when the Commonwealth energy rebates arrived, the ABS counted them as lower electricity prices. In the year to August 2024, with the Energy Bill Relief Fund applying in every state and territory, the ABS recorded electricity prices falling 17.9%, and noted that without the rebates household electricity costs would have risen 16.6% since June 2023 (ABS, August 2024).
Run that in reverse and you get August 2026. The rebates finished, so what households pay went back up, and the index records a rise. The ABS also notes that the annual figure jumped from 6.1% in July partly because of when rebate payments landed in 2025, which is why one month can look so different from the next. (We covered the household-bill side of the rebate ending in Nobody sends a notice when relief ends.)
The mechanism matters because it cuts both ways. A rebate pulls measured inflation down while it runs, then pushes it up when it stops. The bill you pay is real either way. But it is the kind of one-off step that the trimmed mean is designed to look through, which is part of why the two measures split this month.
Why the RBA cares
The RBA's job is keeping inflation between 2% and 3% (RBA). On 29 September it raised the cash rate by 25 basis points to 4.60%, saying "inflation remains elevated" and that recent outcomes "were stronger than expected" (RBA statement).
Both August measures sit above that band. A headline at 4.0% with a trimmed mean at 3.6% says two things at once: some of the jump is one-off, and the underlying pace has not come down either. A rate rise works by slowing spending across the whole economy. It does nothing about a rebate ending, and that is a reason the underlying measure gets so much attention.
What to watch on 28 October
- The release: the ABS publishes September CPI on Wednesday 28 October. September closes out the quarter.
- Headline vs trimmed mean: whether the gap between them stays open, or the trimmed mean starts moving.
- Electricity: whether the rebate effect keeps pushing the annual figure around as last year's payment timing drops out of the comparison.
- Fuel: August's 14.8% monthly jump was partly a one-off excise step. Whether it repeats depends on world oil prices.
- Then the RBA: the Board next meets on 2 to 3 November.
We are not going to guess either number. What a September result would mean for rates is exactly the sort of thing the RBA itself does not commit to in advance.
How Funance helps
- The Bills and Subscriptions view shows what your electricity costs over a full year, so a rebate disappearing shows up as a number rather than a vague feeling.
- The Scenarios tab (Pro) lets you model rates up and down before 3 November, so the next decision is a figure you have already seen.
This post is general information about published ABS inflation data and a public RBA decision. It is not personal financial advice, and I am not a licensed adviser. For your own situation, talk to a licensed financial adviser.