CPI edges lower, but persistent core pressures keep further tightening on the table
Inflation slowed in November, softening the immediate case for the Reserve Bank of Australia (RBA) to lift the cash rate at its first meeting of 2026, but a further increase remains a possibility.
New figures from the Australian Bureau of Statistics show annual headline Consumer Price Index (CPI) eased from 3.8% in October to 3.4% in November, while trimmed mean inflation edged down from 3.3% to 3.2% over the same period. Both measures remain above the RBA’s 2%–3% target band and well short of the 2.5% midpoint that policymakers aim to achieve over time.
The monthly CPI data indicate that inflation is now drifting lower after re-accelerating through the middle of 2025. Headline CPI rose from 2.4% in April to 3.8% in October, before November’s moderation to 3.4%. Over the same period, trimmed mean inflation moved from 3.1% in April, fell to 2.8% in June, then climbed back to 3.3% in October before easing slightly to 3.2% in November.
With the next RBA board meeting scheduled for Feb. 2 to 3, market expectations for a rate hike have been pared back, but not removed. The central bank will receive several important data releases before it decides whether to change policy settings.
Key indicators still to be published ahead of the February decision include the ABS Monthly Household Spending Indicator for December (due Jan. 12), the December labour force report (Jan. 22), and, crucially, the December monthly CPI and the December quarter inflation data (Jan. 28). The quarterly figures will carry particular weight for the RBA’s assessment of underlying price pressures.
Any move in February would flow quickly through to variable mortgage rates if lenders pass on a change in full. Canstar analysis indicates that a 0.25 percentage point rise in the cash rate would add around $90 a month to repayments for an owner-occupier with a $600,000 loan and 25 years remaining.
“The latest inflation figures have reduced the chance of a rate hike in February, however, we’re not in the clear just yet,” said Sally Tindall (pictured right), data insights director at Canstar.com.au.
“Inflation is now moving back in the right direction. That’s a small win for the RBA but the reality is trimmed mean inflation has been at or above 3% for five consecutive months. What this tells us is that the current cash rate setting might not be high enough to bring inflation back down to its target of 2.5%. Much will be riding on the next round of quarterly inflation figures due out six days before the RBA’s next cash rate call.
“The [RBA] governor has already made it clear the Board will be putting a lot more weight on the quarterly results for now. The possibility of a rate hike is still very much a live one and borrowers should take the time to get ahead of the game while they can.”
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