Inflation behaves...in February anyway

Calm before inflation storm

Took a pleasant stroll along Peregian Beach this morning - it was a particularly nice day for a walk given that the price of diesel had increased yet again to 309.9 per cents at the local servo. 

Wow.

The ABS released the inflation data for the month for February this morning, which related to calmer and happier times when fuel prices were actually down over the year. 

Inflation was well-behaved in the month - flat, in fact, in original terms - and came in a little lower than expected at 3.7 per cent over the 12 months to February 2026, versus 3.8 per cent expected. 

Source: ABS

The trimmed mean inflation reading was 0.2 per cent for the month, also a little lower than expected, and came in at 3.3 per cent over the year.

Source: ABS

What these figures show is that Australia clearly had inflation challenges before the onset of conflict in  the Middle East, with inflation tracking above the target 2 to 3 per cent range.

With the rebates now gone, more realistic and higher electricity and energy prices are now feeding into the inflation data, with prices rising by 37 per cent over the year to February, up from 32.2 per cent in January. 

Source: Westpac

High levels of population growth and big spending across all levels of government have been contributing factors to inflation running above target, at a time when other countries had previously managed to get inflation under control. 

The NDIS grabs a lot of the headlines given the gargantuan budget overruns, but there are - and will continue to be - similar challenges in infrastructure projects. 

Housing supply woes

Employment and capacity remains extremely tight in sectors such as construction and development, and rents are re-accelerating again.

Indeed, housing was the main contributor to annual inflation, with the sector seeing prices rising by 7.2 per cent, up from 6.8 per cent in January. 

Dr Alex Joiner of IFM Investors charted the enormous increase in production price inputs to residential construction resulting from the pandemic supply shock, and the current episode will likely lead to more developer insolvencies as the cost of materials and supplies jump once again.

Source: IFM Investors

It looks increasingly likely that the government's target of 1.2 million new homes over 5 years will be missed by about 25 to 30 per cent. 

The wrap

Overall, there was nothing too exciting in today's figures.

However, the flare-up of oil prices and supply shocks will start to flow through into the inflation numbers from March 2026 onwards.

On the plus side, international tensions appear to have de-escalated a little over the past 48 hours, and the oil price has fallen back to below $100.

Australia's 3-year bond yield has eased from 4.93 per cent on Monday to 4.61 per cent this morning. 

Still, the central bank will likely have little option but to increase interest rates at least a couple more times to take the sting out of inflation expectations. 

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Recessionary conditions begin with short shrift

Services slump

The fallout from the oil price shock has been swift indeed.

S&P released its flash PMI readings for Australia for the month of March, which saw the services PMI plunge from 52.8 in February to 46.6 for the month of March.

A reading of under 50 denotes contraction, and services activity represents the bulk of the Aussie economy. 

With interest rates going up in February, March, and soon May, this is only going one way from here...down. 

Australia is particularly vulnerable to fuel shortages, and parts of the country are already reported shortages of diesel, which can only serve to constrain economic activity. 

Justin Fabo from Antipodean Macro posted the below chart showing the services sector dropping into a likely recession. 

S&P reported that input price inflation rose to the fastest pace in 3 years. 

Manufacturing cost inflation rose to a 3½ year high, while services price inflation rose to the highest level in over 2½ years.

Consumer inflation expectations have soared accordingly, while the latest consumer confidence survey showed the lowest single result in my lifetime!

Anecdotally, few firms are looking to actively hire in this highly uncertain environment, at a time when AI was already disrupting the tech sector, meaning that the unemployment rate is likely to rise in due course.  

Bond yields fell sharply overnight as Trump posted about negotiations with Iran, but it barely seems worth adding commentary here, since whatever I post will likely already be dated by the time I hit 'Publish'.

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    3. Subscribe for my free daily blog

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My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

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There goes residential building...

Diesel power

Stopped for a coffee and a booster slice at Caboolture servo today on the way home from the Gold Coast - that's the first time I've seen diesel for sale (in Australia) for more than $3 per litre...

It should probably go without saying that is uncharted territory, and the longer this goes on for the greater the pain and associated price pressures will be. 

Bloomberg's chart below shows how when oil prices rise, this can pass through pretty quickly into higher food prices as transport and freight handling costs rise. 

New home sales dive

New home sales fell by -20.3 per cent in February, with the first rate hike on February 4 apparently taking an immediate effect.

Further rate hikes in March and May will likely kill off much of the remaining optimism for residential construction, even before accounting for potential changes to property tax legislation in the Federal Budget.

Source: Housing Industry Association

The cost of capital is one thing, but the inputs into homebuilding, including a wide range of materials, piping and plumbing products, bathroom supplies - and the like - are all going to experience large price increases forthwith.

Source: ASX

Market pricing is now looking for a cycle high cash rate potentially peaking at 4.85 per cent by the end of the year, which would quite likely result in recessionary conditions for many consumers. 

---

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The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

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My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

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Podcast: There aren't enough houses! Interest rates are rising again

2-Sense podcast

This week on the property podcast, Chris and I discussed:

• RBA lifted rates and could do so again if inflation persists 
• Oil shock reigniting inflation risk, feeding into rate expectations and dampening buyer confidence
• The hidden costs of moving house in Australia
• First-home buyers still active but adjusting budgets; upgraders slowing, especially in key markets
• Market turning K-shaped: premium softening while entry-level demand stays strong via 5% deposit schemes
• Rental pressure intensifying: how long will shortages last?
• Structural challenges: dwelling numbers, demographic shifts, and mismatched supply
• Development conditions are constrained: what can builders do?
• Listener Q&A

Tune in here (or click on the image below):

You can also watch the YouTube version here:

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1. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog with over 4.6 million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 16,500 followers. 

By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Oil shock hits Aussie shores apace

Fuel prices flashing red

I joined a long queue of morose-looking customers at the bowser in Coolum Beach this afternoon, where unleaded fuel was selling from 240 cents per litre, and diesel from around 280 cents.

It seems a long way from the days of Albo blaming then-PM ScoMo for fuel prices rising to around 170 cents per litre!

Indeed, we have now ascended into totally uncharted territory for fuel prices in Australia. 

Alex Joiner of IFM Investors produced the below chart for some context:

This is a massive shock from 160 cents or so for unleaded a mere matter of weeks ago.

Higher transportation and freight nadling costs will also quite quickly be passed on to higher food prices. 

Unless something changes soon, it feels as though the Reserve Bank may have little choice but to hike interest rates for a third time in May, taking the cash rate target back up to 4.35 per cent, with a further couple of hikes seemingly likely by the end of the year. 

Meanwhile the spike in fuel prices will itself crush consumer sentiment and spending, so the Aussie economy will be heading into the slow lane in the second half of 2026.

And on that glum note, have a super weekend!

---

1. Download our property buying guide

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    2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog with over 4.6 million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 16,500 followers. 

By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Unemployment rate rises to 4.3pc

Unemployment rate rises

There's been a recent but evident sentiment shift in Australia since the interest rate hikes in February and March, as well as the surge in fuel prices, which is perhaps set to result in slower hiring. 

Job ads were already  lower by the end of February. 

For the month of February itself, the labour force survey showed that headline employment was solid enough, increasing by +48,900, driven by part-time jobs. 

But at the same time full-time employment dropped by -30,500, as more of the older (aged 65 plus) cohort moved into part-time work, resulting in fewer hours worked overall.

The economy has created very few full-time jobs on a net basis since July 2025.

As the participation increased to 66.9 per cent, the seasonally adjusted unemployment rate increased from 4.1 per cent to 4.3 per cent.

Nothing too alarming just yet, of course, but certainly one to watch over the next few months. 

The underutilisation also increased a little to around 10 per cent.

Finally on the employment figures, and for what it's worth, the ABS estimated that the growth in civilian population aged 15 and over increased by +1.83 per cent over the year to February 2026. 

Overall, not a labour force survey report that should be too consequential in itself, but the rising unemployment rate will be one to keep an eye on.

James Foster took a look at the figures is his customary more detailed manner here. 

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Population increases

The ABS also released the latest estimated resident population figures for the September 2025 quarter, which confirmed that net overseas migration has moved higher, and far above the government's previous assumptions.

Net overseas migration increased to +87,800 over the September quarter, resulting in quarterly population growth of +112,600.

Annual population growth - having bottomed out in March 2025 - increased a bit further to +423,600.

Source: ABS

At the state level absolute population growth was highest in Victoria (+122,000), New South Wales (+105,600), and Queensland (+97,300), but the annual rate of population growth was fastest by far in Western Australia (+2.2 per cent). 

Source: ABS

As expected, it looks like population growth bottomed out a year ago and has been steadily re-accelerating since that time, as reflected in rental market pressures. 

---

1. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog with over 4.6 million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 16,500 followers. 

By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Net long-term arrivals hit new highs; recession risk rising

Arrivals remain high

There were a record 1.16 million permanent and long-term arrivals into Australia over the year to January 2026, according to the ABS.

Netting out permanent and long-term departures, it was the highest January figure on record for net permanent and long-term arrivals (+57,270).

It was also the second biggest 12 months on record for permanent and long-term arrivals (+494,540), just shy of the record high set in the post-COVID rebound of February 2024. 

February is normally a bigger month for long-term arrivals too.

With all the usual caveats - any way you to try to spin this - these are big numbers. 

The ABS definition of 'net overseas migration' may produce a different and lower result when the formal estimated resident population figures are released, but you only need to go to a few rental open homes to know that in real time population pressures have been resurgent over the past 12 to 15 months.

Recession risk rising?

After yesterday's split decision (5 votes to 4) on increasing the policy rate, markets are looking at about an each-way chance of a follow-up hike in May, and a terminal cash rate target of around 4½ per cent. 

Source: ASX

While it may be partially disguised by rapid population growth, the risk of recessionary conditions in late 2026 has increased.

It's only one data point, but Jobs & Skills Australia reported that job vacancies fell by a seasonally adjusted -5 per cent in February 2026, driven by a fairly sharp -6.2 per cent decline in New South Wales, and with all states and territories recording declines. 

Source: Jobs & Skills Australia

The ABS will release its full Labour Force survey for the month of February tomorrow morning. 

---

1. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog with over 4.6 million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 16,500 followers. 

By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

ausbiz TV: Buyer beware as RBA hikes again

ausbiz TV

On the day of the Reserve Bank's policy announcement, I joined Andrew at ausbiz TV to discuss what it all means for the housing market.

Tune in here (or click on the image below):

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1. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog with over 4.6 million hits here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 16,500 followers. 

By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.