Bodyblow for householders as inflation SOARS – and Aussies are warned to brace for a TRIPLE whammy on rates of interest
Mortgage holders face a fresh blow, with hotter‑than‑expected December inflation raising the risk the Reserve Bank will keep interest rates on hold even longer – a make‑or‑break moment for already stretched households.
New ABS data released on Wednesday shows the Consumer Price Index (CPI) rose 3.8 per cent in the 12 months to December as price pressures remain stubborn across key household categories with housing the biggest contributer jumping 5.5 per cent over the year.
The trimmed mean – the Reserve Bank’s preferred underlying measure because it strips out volatile price swings – rose to 3.3 per cent in the year to December, up slightly from 3.2 per cent in November.
Food and non‑alcoholic beverages rose 3.4 per cent and recreation and culture increased 4.4 per cent.
Goods inflation lifted to 3.4 per cent, pushed up heavily by electricity prices, which surged 21.5 per cent.
Services inflation rose to 4.1 per cent over the year up from 3.6 per cent in November with the strongest increases in domestic holiday travel and accommodation (+9.6 per cent) and rents (+3.9 per cent).
Australians also paid more for meals out and takeaway, up 3.5 per cent, as cafés and restaurants passed on higher wage and ingredient costs.
Food prices continued to climb across the board with meat and seafood up 4.4 per cent, with beef and lamb both jumping more than 10 per cent amid strong international demand.
Reserve Bank Governor Michele Bullock (pictured) has been battling to keep Australia’s inflation rate between 2 and 3 per cent
Australian mortgage holders were warned last week they may not receive any rate relief over the next 12 months, as banks quietly increase interest rates
Fruit and vegetables increased 4 per cent, up from 2.7 per cent in November.
The Reserve Bank of Australia has been battling to keep Australia’s inflation rate between 2 and 3 per cent. In November, inflation was at 3.4 per cent.
The increase in official estimates of inflation led to the Reserve Bank’s decision to leave interest rates unchanged for its last three meetings in October, November and December 2025.
It was the first time since 2024 the Reserve Bank has left interest rates unchanged at three consecutive meetings.
