Why did inflation slow to 3.4% but policy risk remains?

Because the monthly gauge eased while the biggest sticky parts did not. Rents remain high, electricity is still costly even with rebates, and new dwelling costs are elevated. These housing items dominate non-tradables, so underlying pressure stays firm, keeping a risk that the RBA may still lift rates.

What would trigger another RBA interest rate hike?

A hotter-than-expected quarterly Australia CPI in late January, especially in the trimmed mean, would raise the odds. Signs of persistent strength in rents, utilities, and other services would add pressure. A tight labour market and firmer wage growth would also support a case for another increase.

How does housing inflation feed into Australia CPI?

Housing inflation flows through rents, electricity, insurance, and new dwelling purchase costs. These are large weights in the CPI basket and tend to move slowly. When they rise together, overall inflation falls more slowly, even if petrol or goods prices ease.

What should investors watch before the late-January CPI?

Focus on the late-January quarterly Australia CPI, labour market conditions, and December retail sales. Watch non-tradables and trimmed-mean measures. Also note any changes to rebates or tariffs that can shift utility bills. These signals will guide market pricing for RBA interest rates in February and beyond.

Global Market Insights

Australia Inflation Today, January 8: Housing Keeps RBA Hike Risk

ByHuzaifa Zahoor January 8, 2026January 8, 2026

Australia inflation slowed to 3.4% year over year in November, but housing costs are still hot. Rents, electricity and new dwelling prices are holding core pressure, keeping RBA interest rates risks alive into early 2026. Markets trimmed odds of a February move, the ASX firmed and the AUD eased, but the picture is not settled. The late-January Australia CPI quarterly report is the next key catalyst. We explain what is driving stickiness, how markets are pricing policy, and what investors in Australia should watch now.