Research Discussion Paper – RDP 2026-02 Shifts in Australian Price-setting Behaviour around Large Shocks

Contents

• Introduction
• Literature Review
• Data
• Measuring Price Rigidity
• How Shifts in Price Rigidity Affect Inflation Dynamics
• How Shifts in Price Rigidity Affect Monetary Policy
• Conclusion
• Appendix A: Data, Cleaning and Sales Algorithm
• Appendix B: Additional Analysis of the Size of Price Changes
• Appendix C: Survival Analysis Regression Results
• Appendix D: Supplementary Figure
• Appendix E: Affect of Shifts in Price Rigidity on Supply-demand Decomposition
• References
• Copyright and Disclaimer Notice

Thanks to Erwan Gautier, Christopher Gibbs, Sarah Hunter, Matthias Klein, Kevin Lane and Claude Lopez for their helpful feedback on this work, and to seminar participants at the RBA, Bank for International Settlements, Bank of Korea, University of Melbourne, University of Queensland, University of Sydney, Australian National University and the 2025 e61/UNSW Macroeconomic Policy Workshop. Thanks to Omer Majeed for making significant contributions to the initial set-up and exploration of our dataset. The views expressed in this paper are those of the authors and should not be attributed to the Reserve Bank of Australia. Any errors are the sole responsibility of the authors.