Australians will have to get used to higher prices, with the Reserve Bank of Australia (RBA) warning that the cost of living is unlikely to ease anytime soon.

RBA Governor Michele Bullock acknowledged in a parliamentary address that while inflation has eased, prices across the board are unlikely to return to pre-pandemic levels.

“The higher price level has affected everyone — whether you’re paying a mortgage, renting, running a business or just trying to make ends meet,” she said. “It’s been especially tough on people with lower incomes and those in more vulnerable situations.”

Assistant Governor Sarah Hunter reinforced the message last week, noting that prices for staples such as milk, bread and petrol are “not coming back down.”

Bullock also stressed that the ongoing housing affordability crunch is more about supply than interest rates.

“Demand is impacted not just by new households but by declining household sizes,” she said. “Supply is an issue, but the way Australians use existing supply also contributes to rising prices.”

RBA Governor Michele Bullock

The RBA’s next cash rate decision is due at the end of September.

Economic data shows mixed signals. Employment fell by 5,400 in August but the unemployment rate held at 4.2%, while inflation remains at the upper end of the 2–3% target band. Analysts predict this is unlikely to be enough to prompt a rate cut this month.

Australia’s Big Four banks – Commonwealth, Westpac, NAB and ANZ – all expect the RBA to hold rates steady at 3.60% in September, with further easing likely deferred until November.

Westpac forecasts additional cuts of 50 basis points in 2026, while NAB anticipates a gradual easing cycle into early 2026.

Consumer spending is picking up but rising prices continue to strain households.

Bullock acknowledged that rate cuts earlier this year were designed to support economic activity, but she stressed the global economic environment remains uncertain.