The Reserve Bank of Australia raised its cash rate target by 25 basis points to 4.85 per cent on 3 November, and its Monetary Policy Board statement names AI among the inflation drivers: “AI-related investment is driving rapid growth in prices for technology-related goods”.
Australian Bureau of Statistics consumer price data show the audio, visual and computing equipment index up 6.1% in the September quarter, by our arithmetic. That is the largest quarterly rise in ABS data going back to 1980; the previous high was 3.5%, in late 1981.
Business Pill · Financial Conditions
An evergreen Business Engineer explainer on financial conditions: several prices, including interest rates, pulling on the economy at once. It teaches the general idea only and does not discuss the RBA or this decision.
The key insight: The RBA wrote AI-related investment into a rate-hike statement as a driver of technology-goods prices. ABS data show audio, visual and computing equipment up 6.1% in the September quarter, the largest quarterly rise since 1980 and about 4.7 times the all-groups CPI pace, by our arithmetic, while the RBA says the effect on overall inflation has so far been limited.
The vote was six to three: “three members voted to leave the cash rate target unchanged at 4.60 per cent”. The statement says inflation “is not expected to reach the top of the 2โ3 per cent target range until late 2027, around three quarters later than previously forecast”.
The full AI sentence reads: “AI-related investment is driving rapid growth in prices for technology-related goods, and inflation in many goods and services remains high”. Fuel and other commodity prices tied to the Middle East conflict, and domestic capacity pressures, are the other drivers the Board lists.
AI appears on the growth side too. The statement says “growth in overall business investment is forecast to be stronger in the near term, including data centre-related investment”, and that trading-partner growth has been stronger than expected “as the boost from AI-related investment has outweighed the adverse effects of the Middle East conflict”.
ABS consumer price index for audio, visual and computing equipment, quarterly, from the March quarter of 2020 to the September quarter of 2026. The index rose from 99.01 to 105.07 in the September quarter, a 6.1% rise and the largest of the 184 quarterly changes in the ABS series since the September quarter of 1980 (previous high +3.5%, December quarter 1981), by our arithmetic. Source: ABS Data API; RBA Statement on Monetary Policy, November 2026.Animated: quarterly percentage change in the ABS consumer price index for audio, visual and computing equipment, June quarter 2020 to September quarter 2026. The changes and the comparison with every quarter since 1980 are our arithmetic on ABS index numbers. Chart: FourWeekMBA.
Where AI Shows Up in the Prices
The Economic Conditions chapter of the November Statement on Monetary Policy ties the quarter’s goods inflation to memory chips. Retail goods inflation was stronger than expected, it says, reflecting “higher prices for some consumer electronics (such as computers, televisions and gaming consoles) driven by strong memory chip costgrowth associated with demand for AI-enabling inputs”.
The RBA now charts a category it labels “AI-related goods (1.6 per cent of CPI basket)” in Graph 2.30, which it says “Includes audio, visual & computing equipment as well as games, toys & hobbies”. The ABS index for games, toys and hobbies rose 5.0% in the quarter, by our arithmetic.
The bank is careful about scale: “Impacts on aggregate headline and core measures of inflation have so far been limited because the affected goods tend to have small weights in consumer price baskets”. It adds that “it is too early to judge the persistence of these price rises”.
Firms feel it as a cost. The RBA’s liaison box reports: “Faster growth in IT costs, in part driven by global competition for memory chips, has been highlighted by many firms”. Chapter 2 adds that “strong pricegrowth for technology-related goods and services such as computers and software is contributing to firmsโ cost pressures”.
The Number in the ABS Data
The ABS index for audio, visual and computing equipment went from 99.01 in the June quarter to 105.07 in the September quarter, a 6.1% rise, by our arithmetic. Across the 184 quarterly changes since the September quarter of 1980, no other quarter rose 5% or more.
The jump came after a long slide. The same index fell 24.4% between the September quarter of 2016 and the June quarter of 2026, by our arithmetic. The all-groups CPI rose 1.3% in the September quarter, so this group rose about 4.7 times as fast, by the same arithmetic.
The ABS’s monthly series shows the turn. Audio, visual and computing equipment prices were 3.0% lower than a year earlier in June 2026 and 4.6% higher in September 2026. Games, toys and hobbies were 15.5% higher in September than a year earlier.
The Loop From AI Capex to the Cash Rate
The Statement traces the chain back through Asian supply chains. It says “Upstream cost pressures are intensifying as capacity in AI-related supply chains struggles to keep pace with soaring demand โ particularly in high-income east Asia”, and that export prices rose “by around 40 per cent in year-ended terms in South Korea” in the September quarter.
Australia is building its own end of the chain. The RBA says activity this year was “supported by very strong investment in data centres”, but that “Investment in data centres has mostly been met by stronger imports, which has limited the impact on overall GDP”.
In the Outlook chapter, one of the staff’s named risks is headed “Key risk #2 โ The global AI demand boom may continue to drive up global growth and inflation”. The chapter says AI-related price pressures “have not broadened materially beyond electronics but could become more persistent or spread to other parts of global supply chains if strong demand continues to run ahead of the expansion in productive capacity”.
As we read the Statement, AI enters the RBA’s inflation story through three doors: imported consumer electronics, the IT and software costs firms report in liaison, and data-centre investment that the bank says has mostly been met by imports.
As we read the ABS series, the jump matters because of the direction it reverses: this group of prices fell 24.4% in the ten years to the June quarter of 2026, by our arithmetic, before rising 6.1% in a single quarter.
RBA Statement on Monetary Policy, November 2026
“AI-related price pressures have not broadened materially beyond electronics but could become more persistent or spread to other parts of global supply chains if strong demand continues to run ahead of the expansion in productive capacity”
Three Implications
FOR THE BASKET The RBA puts its AI-related goods group at 1.6 per cent of the CPI basket, which is why the bank says the effect on aggregate inflation has so far been limited.
FOR FIRMS Many firms in the RBA’s liaison program report faster growth in IT costs, in part driven by global competition for memory chips, and say vendors are passing their own costs into service and subscription prices.
FOR THE AI CAPEX LOOP The same boom shows up twice in the Statement: as stronger growth in Australia’s trading partners and in data-centre investment, and as higher prices for technology goods and inputs.
The framework reads: “This is not a continuation of the cloud capex cycle. This is a different cycle, with different physics.”
As we read it, the RBA’s November statement shows that cycle reaching a central bank’s inflation read: AI capex lifts memory-chip costs, those costs reach consumer electronics and firms’ IT bills, and the bank cites them beside fuel when it raises rates. The framework was published in May 2026 and does not discuss the RBA.
The RBA does not say how much of the rate decision rests on AI-related prices; its statement lists them beside fuel prices, capacity pressures and inflation expectations. Three of nine Board members voted to hold.
The ABS index measures audio, visual and computing equipment as a group; it does not separate memory costs. The link from memory chips to these prices is the RBA’s assessment. The 1980 comparison uses the index series as published in the ABS Data API.
This Week In The AI Supercycle
Anthropic’s Reality Check, The Capital Squeeze, & The New World Order
This week’s issue: for two years the AI build-out was priced as a growthstory. This week it started being priced as a credit story.
The RBA raised its cash rate to 4.85 per cent and wrote AI-related investment into its inflation story, as a driver of technology-goods prices. In the ABS data, audio, visual and computing equipment rose 6.1% in the September quarter, the largest quarterly rise since at least 1980, by our arithmetic, while the RBA says the effect on overall inflation has so far been limited.
A note on sourcing. Quotations are from the RBA’s Monetary Policy Board statement of 3 November 2026 and its November 2026 Statement on Monetary Policy. Index numbers are from the ABS Consumer Price Index via the ABS Data API (original series, weighted average of eight capital cities). Quarterly changes, the 1980 comparison and ratios are our arithmetic.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
