> ## Content Index > Fetch the complete content index at: https://www.benchmarkanalytics.com.au/llms.txt > Use this file to discover other available public pages before exploring further. # A reflection on the source of domestic inflation - housing - URL: https://www.benchmarkanalytics.com.au/housing-inflation-tradables-australia-2026/ - Published: 2026-10-04T20:00:08.000Z - Updated: 2026-10-04T20:00:07.000Z - Description: Housing is now contributing more to Australian inflation than every tradable good and service combined. - Author: Nick Hossack - Tags: Australian Housing Inflation, Inflation, Non-tradeable Inflation, Tradeable Inflation, Electricity Prices, Rents, Building Costs Australia’s biggest inflation problem is not petrol. It is housing. The August CPI shows housing prices 5.7 per cent higher than a year earlier, making housing the largest contributor to annual inflation. The detailed ABS contribution data put the scale of the problem into perspective. Housing added approximately 1.24 percentage points to Australia’s annual CPI increase. By comparison, the entire tradables component of the CPI — covering prices most exposed to international trade, including fuel and many imported goods — contributed approximately 0.99 percentage points. Housing alone is therefore currently adding more to Australian inflation than all tradable goods and services combined. Three components account for most of the housing contribution. New dwelling prices increased 5.4 per cent over the year and contributed around 0.40 percentage points to CPI. The ABS says builders continue to pass through higher materials and labour costs. Electricity contributed another 0.32 percentage points. Annual electricity inflation reached 13.2 per cent, although this figure is heavily affected by changes to government electricity rebates and should not be interpreted simply as current market-price inflation. Rents contributed approximately 0.24 percentage points, with rental prices 3.6 per cent higher over the year. Together, those three items account for roughly three-quarters of housing’s contribution to inflation. This helps explain why separating imported from domestically generated inflation matters. Tradable inflation is currently 2.9 per cent. Non-tradable inflation is 4.5 per cent. And of the approximately 3.96 percentage points of annual CPI inflation recorded in August, non-tradables contributed 2.97 points — almost exactly 75 per cent. The immediate August inflation shock came through fuel. But the reason Australian inflation remains persistently above target lies much closer to home: housing, construction costs and domestically determined services. The RBA therefore cannot simply wait for oil prices to fall. Even if the global energy shock disappears, a substantial domestic inflation problem remains. | Housing is adding more to inflation than all tradables combined | | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Australia’s August CPI shows why the inflation problem cannot be explained by imported prices alone. | | Housing +1.24pp contribution to annual CPI All tradables +0.99pp contribution to annual CPI | | **Housing alone is contributing around 25% more to annual CPI**than every tradable good and service in the CPI basket combined. | | What is driving housing inflation? | | Housing component Annual price change CPI contribution New dwelling purchase +5.4% +0.40pp Electricity +13.2% +0.32pp Rents +3.6% +0.24pp Other housing — +0.28pp Total housing +5.7% +1.24pp | | Share of annual CPI contribution 75% non-tradable Non-tradables contributed approximately **2.97 percentage points** of the **3.96 percentage-point** annual CPI increase. | | The domestic inflation gap remains wide | | CPI component Annual inflation Annual contribution Non-tradables 4.5% +2.97pp Tradables 2.9% +0.99pp | | **Important:**not every housing price movement represents underlying market pressure. The annual electricity increase is materially affected by the timing and treatment of government energy rebates. New dwelling costs and rents provide a cleaner indication of persistent housing-related price pressure. | | **Benchmark takeaway:**August’s immediate inflation shock came through fuel, but the larger underlying problem remains domestic. Housing alone is currently adding more to annual CPI than the entire tradables sector. | | Source: Australian Bureau of Statistics, Consumer Price Index, Australia, August 2026\. Benchmark Analytics calculations using ABS CPI contribution tables. Contribution figures use unrounded index-point data and may differ slightly from published rounded percentage changes. |