Australia’s Inflation Gauge Steady Ahead of RBA Decision

Australia’s Monthly Inflation Gauge, compiled by the Melbourne Institute, rose 0.2% month-on-month in January 2026, easing sharply from December’s two-year high of 1% and marking the slowest pace since last August. The latest result comes ahead of the Reserve Bank’s first policy meeting of 2026, following its decision to hold the cash rate at 3.6% for a third consecutive meeting in December. The moderation highlights how earlier monetary tightening is filtering through the economy, tempering demand-side pressures. Even so, policymakers are expected to remain cautious, with underlying inflation still above target and the labor market relatively tight. The central bank is likely to maintain a restrictive stance and stress data dependence in the months ahead.

Australia’s Monthly Inflation Gauge, compiled by the Melbourne Institute, surged 1.0% mom in December 2025, marking the fastest pace since December 2023 and a sharp pickup from 0.3% in the prior two months. The latest result came as the Reserve Bank held the cash rate steady at 3.6% for a third consecutive meeting in the month. Policymakers noted inflation has cooled markedly from its 2022 peak but flagged renewed momentum in recent data. Headline CPI eased to 3.4% yoy in November, the lowest since August, yet still above the central bank’s 2–3% target. Trimmed mean CPI also edged down to 3.2% from October’s eight-month high of 3.3%. The board assessed that inflation risks have modestly tilted upward, while downside pressures, particularly from global conditions, have eased. Board members anticipate just one more rate cut this year, with underlying inflation expected to exceed 3% in the near term before easing to around 2.6% by 2027.

Australia’s Monthly Inflation Gauge, compiled by the Melbourne Institute, rose 0.3% month-on-month in November 2025, matching October’s pace and marking a third consecutive monthly increase. The latest data comes ahead of the Reserve Bank of Australia’s policy meeting on December 9. In November, the RBA kept its cash rate at 3.6%, maintaining borrowing costs at their lowest since April 2023. The central bank noted that inflation has eased sharply from its 2022 peak, despite a temporary uptick in September. The board anticipates one more rate cut in 2026, with underlying inflation expected to exceed 3% in the near term before moderating to around 2.6% by 2027. The annual inflation rose to 3.8% in October from 3.6% in September, remaining above the RBA’s 2–3% target, while the trimmed mean CPI climbed to 3.3% year-on-year, surpassing the 3% consensus.