I am a bit late to the party, but we kicked off the year with an inflation update from the ABS.
For November 2025:
☑️ Headline Inflation was 3.4% YoY
☑️ Core inflation was 3.5% YoY
☑️ Tradeable inflation was 1.8% YoY
☑️ Non-tradeable inflation was 4.3% YoY
Inflation remains well outside the RBA’s target range, despite being essentially flat month on month over the last two months. I expect it to remain above 3% for atleast the first half of 2026, for a number of reasons:
💡 Government energy rebates are slowly expiring, and this will have both a direct impact on inflation and flow on impacts on other prices.
💡 Housing costs will continue to rise. While there has been a slight pause in prices over the last few months, nothing has fundamentally changed in the supply demand balance in that market, so prices are certain to keep rising.
💡 The November figures were clearly impacted by retailer discounting as the traditional discount shopping season moves earlier in the year, depressing prices.
💡 Household spending remains very robust, growing are more that 6% YoY, meaning there is plenty of spare demand in the economy to fuel price increases.
The balance in the economy is still towards excess demand and while cost pressures on businesses remain strong, it's a clear recipe for more inflation.