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Underlying inflation, which is the consumer price index (CPI) excluding items that have particularly large price changes, rose 3.2% in December 2024. This was down from a 3.4% increase in November, according to the latest CPI from the Australian Bureau of Statistics (ABS).
The Reserve Bank of Australia (RBA) typically uses underlying inflation as one of the metrics to guide its next interest rate decision. The RBA has been clear over the last year that its goal was to return underlying inflation to within its target range of 2-3%.
After the central bank’s monetary policy meeting in December, RBA governor Michele Bullock was more optimistic about the data than she had been throughout 2024. “We’re not saying that we’ve won the battle against inflation yet, but we’re saying we’ve got a little bit more confidence that things are evolving as we think in our forecasts,” she said.
The latest ABS data is likely to add to the RBA’s confidence that inflation is moving in the right direction.
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