Financial News: Australia Inflation Softens In December

Australia Inflation Softens In December

01/29/2025 - 00:30:00 (RTTNews)

(RTTNews) - Australia's consumer price inflation eased in December to the lowest since early 2021 on falling electricity and auto fuel prices, the Australian Bureau of Statistics reported Wednesday.

Consumer prices logged an annual increase of 2.4 percent in the December quarter, following a 2.8 percent rise in the preceding period. This was the lowest rate since March 2021.

The main contributors to the slowing of annual inflation were large falls in electricity and automotive fuel, with easing inflation for new dwelling prices.

On a quarterly basis, the consumer price index rose 0.2 percent, the same pace of growth as seen in the September quarter.

The 0.2 percent increase was the lowest recorded since the June 2020 quarter when the CPI fell during the COVID-19 outbreak when childcare was free, ABS head of prices statistics Michelle Marquardt said.

Annual trimmed mean inflation eased to 3.2 percent in the fourth quarter from 3.6 percent in the third quarter.

The statistical office also released the December monthly CPI indicator today, which rose 2.5 percent on a yearly basis in December, which was faster than the 2.3 percent rise in November.

The increase was driven by higher costs of food and non-alcoholic beverages, alcohol and tobacco and housing.

Capital Economics' economist Abhijit Surya said the big picture is that today's data should increase the RBA's confidence that underlying inflation is declining sustainably towards target.

The economist expects the RBA to begin its easing cycle in February, rather than May. Looking ahead, the bank will only cut rates by a cumulative 75 basis points over the easing cycle.

But, on balance, risks are tilted towards more aggressive loosening, the economist added.

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