Inflation pressure in the pipeline has not eased. The Australian Bureau of Statistics said on Friday 30 October that final demand producer prices, excluding exports, rose 1.1% in the September quarter and 3.6% over the year. The annual rate was unchanged from the June quarter.

What drove it

The ABS said the rise was primarily driven by the construction and services industries. The main contributors were property operators (+1.0%), reflecting elevated demand and higher rents for residential property, and residential building construction (+1.1%), driven by skilled labour shortages and elevated freight and transport costs for imported materials.

Services prices were pushed up by wages. The ABS noted the Fair Work Commission’s 4.75% minimum award wage increase, the strongest since 2023, along with enterprise agreement rises and annual contract reviews, flowed through to output prices in several service industries.

Construction still running hot

  • Output of building construction rose 1.3% in the quarter and 4.9% over the year.
  • Non-residential building rose 1.7%, which the ABS linked to public works such as hospitals and schools and to data centres in the private sector.
  • House construction rose 1.0%, easing from 2.0% in the June quarter, as weaker demand tempered higher costs. Over the year, house construction prices are up 5.7%.
  • Input prices to house construction rose 1.0%, with plumbing products up 3.7% on higher PVC costs and copper pipes and fittings up 9.5%.

The offset from fuel

Partly offsetting the rise, petroleum and coal product manufacturing fell 9.8% in final demand as global oil prices eased from their June quarter spike. Output of manufacturing overall fell 1.3%, and road freight transport prices fell 3.0% on lower fuel surcharges. The ABS noted fuel excise is out of scope for producer prices, so the unwinding of the federal fuel excise relief in July and August did not directly lift fuel prices in these figures.

Ahead of the RBA

The data arrive days before the Reserve Bank’s board announces its decision at 2.30pm on Tuesday 3 November. The ABC reported that all four major banks expect the cash rate to rise from 4.6% to 4.85%.

For businesses that build, fit out or lease, the message from the producer data is that labour and materials costs are still rising faster than the RBA’s target, even with oil off its highs. Quotes and contract escalation clauses deserve a close look.

Sources: Australian Bureau of Statistics, Producer Price Indexes, Australia, September 2026 (released 30 October 2026); ABC News, 30 October 2026.