2026.01.1900:24:48UTC+00Australia’s Inflation Gauge Hits 2-Year High

Australia's Monthly Inflation Gauge, produced by the Melbourne Institute, showed a significant increase of 1.0% month-over-month in December 2025, representing the fastest rate since December 2023 and a notable rise from the previous two months' 0.3%. This recent development emerged as the Reserve Bank maintained the cash rate at 3.6% for the third consecutive meeting within the month. Policymakers acknowledged a significant cooling in inflation from its peak in 2022 but pointed out a renewed momentum based on recent data. The headline Consumer Price Index (CPI) reduced to 3.4% year-over-year in November, marking the lowest level since August, though it remained above the central bank's target range of 2–3%. The trimmed mean CPI also slightly decreased to 3.2% from October's eight-month peak of 3.3%. The board evaluated that the risks associated with inflation have modestly shifted upward, while downward pressures, primarily from global factors, have diminished. Board members forecast only one more rate cut for the year, with underlying inflation expected to surpass 3% in the short term before retreating to approximately 2.6% by 2027.