Daily London
The consumer price index (CPI) for December rose to 3.8 per cent for the past 12 months – up from 3.4 per cent in November and more than the roughly 3.5 per cent economists had expected, the Australian Bureau of Statistics announced this morning.
Ahead of the data release, the big four banks were split as to whether the RBA will hike the cash rate next week, while the market was pricing in a slightly better than even chance of a rise.
Commonwealth Bank and NAB are both forecasting a 25-basis-point increase next week, while Westpac and ANZ have predicted a hold.
Following the fresh figures, Bank of Queensland chief economist Peter Munckton said a hike appears likely.
“Almost all the main CPI measures are comfortably above the RBA’s target band,” he said.
“This is also consistent with the message from the level of inflation expectations of both firms and consumers.
“Both the press conference post the December meeting as well as the minutes of that meeting suggest the RBA was becoming increasingly concerned about inflation.
“Since then, we have found out that inflation ended the year higher than RBA forecasts and above target…
“A quarter percentage point cash rate hike will likely be locked and loaded for the February meeting.”
Zyft consumer finance expert Joel Gibson said a rate rise would be a significant blow to household budgets.
“Aussies were spending $178 per week on groceries in August 2025, but with today’s CPI figures in mind, inflation will add another $6 a week to the trolley, or $312 across the course of the coming year,” he said.
“This trolley hit is even more severe when you look at the essentials: coffee, tea and cocoa are up 15.3 per cent, while proteins like lamb and goat have jumped 13.4 per cent, and beef and veal have risen 10.8 per cent.
“And if we get a rate rise, a 0.25 per cent hike could add another $115 to the monthly repayment on an average $694,000 mortgage.
“All of these increases combined would mean an average Australian household should stand to shell out an additional $2192 over the course of this year.”
The RBA will hand down its next interest rate decision on Tuesday.
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