RBA consumer price index: Inflation running too hot for comfort ahead of first 2026 snapshot
The first economic snapshot of the year could show a slowdown in inflation, but perhaps not enough to prevent the Reserve Bank hiking interest rates.
Hopes of further rate relief were dashed by a resurgence in inflation in the second half of 2025, with analysts and bond traders predicting the central bank’s next move to be up rather than down.
Economists expect the Australian Bureau of Statistics will on Wednesday reveal the consumer price index fell from 3.8 per cent to 3.6 per cent in November.
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By continuing you agree to our Terms and Privacy Policy.Importantly, NAB senior economist Taylor Nugent forecasts the less-volatile trimmed mean figure will rise 0.3 per cent over the month, or 3.3 per cent year-on-year.
Wednesday’s update will have limited relevance for the RBA, given it will be superseded by December quarter inflation data before its board meeting in February.
But a 0.3 per cent rise in the trimmed mean would put the quarterly figure on track for a 0.9 per cent increase, which would be “too hot for comfort” for the RBA, Mr Nugent said.
Given that would be 15 basis points higher than the RBA’s latest forecasts, NAB expects the board will be forced to hike rates in February, with another hike likely to come in May.
The November CPI will be pushed up by the timing of some energy rebates rolling off.
But the RBA will be less concerned by such temporary factors and will pay closer attention to stickier items such as new dwelling costs and market services.
Speaking after the board held rates steady at 3.6 per cent in December, RBA governor Michele Bullock said the board was still tossing up whether the spike in inflation was mainly driven by temporary factors or whether it was likely to be more persistent.
“If inflation continues to be persistent and looks like it is not coming back down towards the board’s target (of 2-3 per cent), then I think that does raise questions about how tight financial conditions are,” she said.
“And the board might have to consider whether or not it’s appropriate to keep interest rates where they are or in fact at some point raise them.”
Mr Nugent expects Wednesday’s data to show growth in new dwellings and rents remains robust but services and consumer goods inflation will gradually cool over coming months from very strong recent outcomes.
