Shock inflation figures launched: What it means for Australians with a mortgage
Australia’s inflation rate has come in lower than economists expected, raising hopes the Reserve Bank may hold off on raising interest rates next month.
After surging to 3.8 per cent on an annual basis in October, the Australian Bureau of Statistics reported on Wednesday that the headline inflation rate retreated to 3.4 per cent in November. Economists had expected it to ease only slightly, to 3.6 per cent.
VanEck deputy head of investments and capital markets Jamie Hannah said the latest data may have taken a near-term rate hike off the table.
‘Had inflation continued to move north, this could have sealed the deal for a rate hike next month – the first increase in more than two years,’ he said.
‘As it stands, the positive developments from today’s inflation print could be enough to keep the rate-hike wolves at bay for now, but the outlook over 2026 remains far from certain.’
Others argue the inflation fight is far from over.
Judo Bank chief economic adviser Warren Hogan said interest rates still need to rise.
‘There’s less than a quarter of the CPI basket below the RBA’s target band,’ he told Sky News.
‘The reality is that over the past six months the economy has improved and inflation has lifted, so the current rate setting is probably not appropriate.
‘I think they should raise rates in February.’
Capital Economics is also sticking to its view that the Reserve Bank could lift the cash rate as soon as next month.
‘It’s probably still too strong for the RBA’s liking,’ said Marcel Thieliant, head of Asia-Pacific at Capital Economics.
‘With little spare capacity left in the economy and the labour market still tight, there is a strong case for the RBA to begin tightening policy again before long.’
While the headline result is a positive sign, it is unlikely to convince the Reserve Bank that inflation is fully under control.
The bank places greater emphasis on the trimmed mean inflation figure, which excludes volatile items to show the underlying pulse of inflation.
The trimmed mean fell from 3.3 per cent to 3.2 per cent after rising 0.3 per cent month to month, still above the RBA’s two to three per cent target band.
Headline inflation was underpinned by the timing of energy rebates rolling off in Queensland, with electricity costs up 19.7 per cent in the 12 months to November.
But the RBA will be less concerned by these temporary factors and will focus instead on stickier costs such as new dwelling prices and market services.
New dwelling prices rose 2.8 per cent in the 12 months to November 2025, up from a 1.7 per cent rise to October 2025, although rents decelerated from 4.2 per cent to 4 per cent.
Given the ABS’s monthly inflation measure is still relatively new and yet to iron out seasonal kinks, the central bank will wait until the December quarter inflation print, due out in late January, before forming a decision on rates.
The RBA will next meet on February 3 to decide if interest rates will drop, rise or stay on hold. Pictured: Reserve Bank governor Michele Bullock
