How dynamic and captive pricing can be structural drivers of Australian inflation

How dynamic and captive pricing can be structural drivers of Australian inflation

The Australian Consumer Price Index shows recreation and culture rising 4.1 per cent in the 12 months to February 2026, driven by significant increases in domestic travel and digital media services.  An RMIT expert explains how a mechanism behind these numbers can be largely invisible in the data.

Dr Meg Elkins, Associate Professor in Economics 

"Traditional inflation is driven by costs or demand. Dynamic pricing introduces a third mechanism; platforms using real-time data and artificial intelligence to identify and capture consumers' ceiling willingness to pay.

"It is not costs pushing prices up.  It is algorithms extracting the maximum price consumers will pay.

"Recreation and Culture is the category where dynamic pricing really bites.  It's not just that prices are rising, it's that they're rising precisely when you most want to participate.

"Whether it’s travelling for school holidays or purchasing tickets for concerts or major events, the algorithm knows when you're desperate, and it prices accordingly.

"Audio, visual and computing media services rose 10.2 per cent annually - the result of every major streaming platform raising prices in 2025.

"This is not competition driving prices up, it is the opposite - captive audiences with deeply embedded habits and no real alternative.

"The RBA can raise interest rates to cool aggregate demand, but it cannot stop a ticketing agent’s algorithm from pricing fans to the limit of their commitment, or streaming platforms from raising prices on subscribers who have already made themselves dependent on the product."

Dr Meg Elkins is an Associate Professor in Economics at RMIT University, specialising in community wellbeing and dynamic pricing. 

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General media enquiries: RMIT External Affairs and Media, 0439 704 077 or news@rmit.edu.au

27 March 2026

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27 March 2026

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