Australia inflation: Consumer prices rose 2.3 per cent in year to November

Economists reckon inflation has not slowed enough to lock in a February interest rate cut, with Australians feeling the pinch on rent, schools, and healthcare.

Prices rose 2.3 per cent for the year to November as power rebates started to melt away, the latest Australian Bureau of Statistics data showed. That was up from 2.1 per cent pace in October.

Stripping out volatility from energy costs painted a better picture, with core inflation dropping from 3.5 per cent to 3.2 per cent, meaning the Reserve Bank’s key measure is closing in on the target zone.

The central bank is likely to brush off the latest data and will focus on quarterly figures to be released later this month. Wednesday’s numbers just give an early guide as to what the readout will be.

Investors upped their bets on rate relief next month but analysts were split on whether the Reserve would have the confidence to pull the trigger.

The door is open for a February cut “but prudence argues for a later start to RBA easing,” Royal Bank of Canada chief economist Su-Lin Ong declared.

Others welcomed the improved core inflation figures while urging caution.

Moody’s Analytics economist Harry Murphy Cruise said the numbers were “broadly good news for those hanging out for interest rate cuts”.

Yet a rise in job vacancies also released on Wednesday showed a tight labour market and made the RBA likely to hold off on relief until May, he said.

EY Senior Economist Paula Gadsby said price rises in services — sectors including education and health — were persistent.

“The Reserve Bank will need further evidence from the comprehensive December quarter CPI . . . to be convinced that prices are returning sustainably to the target,” she said.

Ms Gadsby expects the RBA’s cash rate will stay at 4.35 per cent until at least March.

ANZ and AMP thought the numbers made a February move to lower rates more likely.

“There has been some good progress in slowing services prices, especially for insurance, travel and, takeaway and restaurant meals,” AMP’s Diana Mousina said.

“While rents are still elevated, they look to have peaked.”

Canberra politicians seized on the figures ahead of a Federal Election likely to be fought on cost of living and economic management.

Treasurer Jim Chalmers said the Federal Government’s policies were “playing a helpful role”.

“These new numbers are an important reminder of the very substantial and sustained progress we have made in the fight against inflation,” he said.

“Inflation was much higher and rising under the Liberals and it’s much lower under Labor across every key measure.”

But his shadow, Angus Taylor, was having none of it, accusing the Government of “rigging the numbers”.

“Today’s inflation data shows the Albanese Labor Government has been hiding inflation, not fighting it.,” Mr Taylor said.

“The increase in electricity prices show Labor has spent billions of taxpayers’ dollars rigging the numbers rather than addressing inflation at the source. It’s a bandaid on a bullet wound.”