But Inflation Isn’t Done With Us Yet
It was a relatively constructive week for Australian markets, with the All Ordinaries Index finishing up around 1.1% and continuing to hold above the psychologically important 9,000 level. That resilience is notable given the backdrop. Inflation came in steady at around 3.8% through January 2026 — not worse, but certainly not convincingly better either. Markets took comfort in the fact that it didn’t spike again, but let’s be clear: 3.8% is still too high for the Reserve Bank to feel comfortable.
The nuance here matters. Inflation didn’t rise, but it also didn’t meaningfully fall. That means the RBA still has unfinished business. The probability of another rate hike hasn’t disappeared — it’s simply been deferred in the market’s thinking. Investors are clinging to signs of stability, and in the short term, that’s been enough to support prices.
One of the more striking contributors to the inflation picture was electricity. With government energy subsidies officially ending, power prices jumped by around 19%. That’s not marginal — that’s material. Energy feeds into everything: households, businesses, manufacturing, transport. When power rises that sharply, it ripples through the entire economy.
So while markets were happy enough this week, the broader reality remains: inflation is sticky, rates are restrictive, and the path forward is still narrow. The market isn’t celebrating — it’s simply relieved that things didn’t get worse. And in 2026, that seems to be enough.
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