Prices rose by 3% in the year to August, according to new monthly inflation figures from the Australian Bureau of Statistics (ABS).
The ABS said it is the highest inflation rate since July 2024.
However, the annual trimmed mean (the rate of inflation once you remove extreme price changes on either side) decreased from 2.7% to 2.6%.
What is inflation?
Inflation measures price growth. The ABS calculates the inflation rate by analysing prices across categories including food, clothes, alcohol and tobacco, housing, and transport.
When inflation is high and unpredictable, your money buys less.
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According to the ABS, the biggest increases in prices over the year to August were alcohol and tobacco (6%), and housing (4.5%).
Changes
Electricity prices fell by 6.3% from July to August 2025, but are up 24.6% over the year.
The ABS attributed this to state government power bill rebates in place last year that have since finished.
Federal rebates have now partly kicked in, contributing to the monthly drop.
