RBA forecasts inflation to peak at 4.5% as rent rises pick up
Alongside this week's rate rise, the Reserve Bank released its new forecasts in the November Statement on Monetary Policy. It now expects inflation to peak at 4.5% in December 2026, well above its earlier forecast of 3.6%, and it flagged a pick-up in the rents tenants are actually paying.
Where the Reserve Bank sees inflation heading
The new forecasts show headline inflation peaking at 4.5% at the end of this year, then easing to 3.7% by June 2027 and 2.7% by December 2027. The bank does not expect it to settle near the middle of its 2–3% target until mid-2028. That is a slower path back than it forecast in August.
Source: RBA Statement on Monetary Policy, November 2026 (forecasts finalised 28 October).
| Dec 2026 | 4.5% |
| Jun 2027 | 3.7% |
| Dec 2027 | 2.7% |
| Jun 2028 | 2.5% |
| Dec 2028 | 2.4% |
Key numbers for renters
The Reserve Bank says rents in the consumer price index rose 0.9% in the September quarter, up from 0.6% in the June quarter, and a faster rise than it expected in August. Unlike advertised rents, this measure covers what existing tenants pay, so it moves more slowly. The bank suggests earlier strong growth in advertised rents may now be flowing through to existing leases.
Why it's happening
There are two forces at work. Advertised rents grew quickly over the past few years, and that growth takes time to reach tenants as leases come up for renewal. At the same time, the bank says vacancy rates have only risen modestly and advertised rent growth has slowed, which is consistent with our report that rent growth is slowing as renters hit a ceiling.
On the wider economy, the bank expects unemployment to drift up from an average of 4.6% in the September quarter to 4.7% by December and a little over 5% by the end of 2028. Its forecasts assume the cash rate averages 4.9% over 2026/27, based on market pricing on 28 October. It also notes housing prices were 4.7% below their recent peak in September.
Practical steps right now
- Check your lease dates. If your renewal falls in the next few months, compare similar rooms now so you know what is fair.
- Budget for the full cost. Add rent, power, internet and transport together, since inflation is hitting several of these at once.
- Think about sharing. Splitting rent and bills across a household is one of the simplest ways to absorb rising costs.
- Owners with a spare room: work out what another rate rise would add to your repayments, and whether room income could cover it.
What it means for you
Renters: the rents people actually pay are still rising, even as advertised rent growth cools, so renewals may bring increases for a while yet. Comparing the total weekly cost of a few options puts you in a stronger position. Listers: renters are watching every dollar. A room priced in line with similar listings, with bills spelled out clearly, is likely to fill faster than one priced at the top of the range.
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- RBA: Statement on Monetary Policy, November 2026 – Overview
- RBA: Statement on Monetary Policy, November 2026 – Outlook
- RBA: Statement on Monetary Policy, November 2026 – Economic Conditions
Figures are from the sources above at the time of writing. This article is general information, not financial or legal advice.