Australia’s headline inflation rate has fallen by 0.4 per cent in the 12 months to last November, though a leading economist believes future rate rises are inevitable. 

Australia’s CPI figures, released on Wednesday, showed inflation had been cooling, landing at a headline rate of 3.4 per cent.  

The trimmed mean inflation rate – that rate which informs the Reserve Bank’s rate decisions – fell to 3.2 per cent from 3.3 per cent. 

Easing inflation can stir mortgage-holders to expect interest rate holds, or even a cut, in the future.  

But Judo Bank chief economic adviser Warren Hogan feared such optimism could be ill-founded.  

He believed the economy was still running too hot for the Reserve Bank of Australia board and tipped another rate rise in February’s meeting.  

“There’s less than a quarter of the CPI basket that is below the RBA’s target band,” he told Sky News on Wednesday.  

“The reality is over the last six months the economy is improving and inflation is rising, so this rate they have is probably not appropriate. 

“I think they should raise rates in February.”

He said the quarterly figure, due in three weeks’ time, would hold more clues as to what the RBA will do come February 3. 

“If that quarterly core inflation number comes in at point nine or higher, I think they’re going to have to raise rates in February and probably a couple of times over the first half of the year,” he said. 

VanEck deputy of investments and capital markets, Jamie Hannah, had a more positive message for millions of mortgage holders, forecasting they could be spared further interest rate pain in February. 

“Had inflation continued to move north, this could have sealed the deal for a rate hike next month, which would be the first increase in more than two years,” he told NewsWire. 

“As it stands, the positive developments from today’s inflation print could be enough to keep the rate hike wolves at bay for now, but the outlook over 2026 is far from certain.”

Despite the falls, both figures remain above the Reserve Bank of Australia’s target range of 2 to 3 per cent, meaning a rate cut in February is still unlikely. 

Of the data announced on Wednesday, Mr Hogan told Sky News he believed the housing figures should be of utmost importance to the government.

Housing was one of the key drivers of the inflation figures, according to the Australian Bureau of Statistics, with costs rising by 5.2 per cent.  

“It’s absolutely core to where inflation goes to the housing component is one of the biggest and it also got a very reliable relationship with where overall inflation in the economy is,” Mr Hogan said.  

“Both housing construction costs and rents are rising. Rents are up quite strongly, 0.4 in the month and 4 per cent over the year, and they too now are trending up after easing back in 2024-25. 

“We’ve got everything that’s essential really moving, or they’re the main drivers, that is food, health, education.”

Prior to Wednesday’s announcement, economists had forecast yearly headline inflation to ease from 3.8 per cent for the 12 months until October to 3.6 per cent in November. 

Federal Treasurer Jim Chalmers welcomed the new data as “very encouraging”, but warned that the economy still faced issues in 2026. 

“The three big economic challenges this year are inflation, productivity and global uncertainty,” Mr Chalmers said in a statement. 

“The global economy remains uncertain due to the ongoing impact of trade tensions, weakness in the Chinese economy and global conflicts.” 

Mr Chalmers said inflation was “still higher than we would like”. 

“While we’ve made good progress on the economy together, we recognise the job is far from over because people are still under pressure.” 

– With NCA NewsWire