Rates Will Rise, But Let’s Play Some Numberwang On The CPI Too…

Описание: Today we got the latest CPI data from the ABS, and it was a bit of a shocker, as the Consumer Price Index (CPI) rose 3.8 per cent in the 12 months to December 2025, up from 3.4 per cent to November. Trimmed mean inflation was 3.3 per cent in the 12 months to December 2025, up from 3.2 per cent in the 12 months to November 2025.

The largest contributor to annual inflation in December was Housing, up 5.5 per cent. This was followed by Food and non-alcoholic beverages, up 3.4 per cent, and Recreation and culture, which rose 4.4 per cent.

The policy-relevant trimmed mean inflation rose by 0.9% in the December quarter, which the RBA will still see as the most important measure, and 3.3% in the 12 months to December 2025, up from 3.2% in the 12 months to November 2025. As Alex Joiner from IFM Investors notes, trimmed mean inflation accelerated to 3.9% on a six months annualised basis. “Along with the upside surprise on headline inflation, there’s a strong case for the RBA to hike next week”, Joiner said on Twitter (X).

This was expected, and the outturn lifts the probability of a rate rise from the RBA as soon as next week because the results were higher than the RBA had expected, and they were already signalling concern before the hot CPI landed, and of course last week we had the strong jobs report.

Recall that the RBA has two mandates: to ensure both price stability and full employment—two goals that often require balancing competing economic pressures. While jobs are tracking with a lower unemployment figure than the RBA expected, inflation is higher. They will need to change their policy rate, higher.

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