Australian households’ inflation expectations rose to 4.9% in August 2026 from 4.7% in July, according to the Melbourne Institute’s monthly survey, reversing two consecutive monthly declines and returning to levels last seen in May. The measure tracks the median price change consumers expect over the next 12 months and remains above the Reserve Bank of Australia’s 2-3% target band, though below the 6.8% peak recorded in early 2023. Underlying price pressures also remain elevated, with trimmed mean CPI rising 3.6% year-on-year in June, its fastest pace since September 2024. Reserve Bank Governor Michele Bullock said inflation remains too high and highlighted upside risks from commodity-price volatility linked to the Middle East conflict. Assistant Governor Christopher Kent said tight monetary policy was working as intended, with restrictive settings weighing on demand and helping return inflation toward target. The increase could reinforce expectations that the RBA will keep its cash rate at 4.35% for longer, affecting the timing of rate cuts, the Australian dollar and bond yields. One month’s data does not establish a trend, but the result underscores the challenge of lowering inflation without stifling economic growth.