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Higher prices for recreation and culture, as well as the cost of living, were the drivers for a rise in monthly inflation for December 2025, according to a private reading.
The Melbourne Institute Monthly Inflation Gauge climbed 3.5% during the month, a Monday press release showed.
The annual headline inflation has been at or above the Reserve Bank of Australia’s target range of 2% to 3% in the past four months.
Data from the Australian Bureau of Statistics showed that household spending in November 2025 expanded 6.3% on a year-on-year, with consumers taking advantage of big discounts as the holidays approached.
However, the consumer price index in the same month slowed down to 3.4% from a year earlier, compared to 3.8% in October 2025. Electricity has been a major factor in lower goods inflation.
Analysts are expecting that the RBA will likely take into account the increased spending and high inflation when the Monetary Policy Board meets in the first week of February.
Some banks and analysts predict that the central bank is likely to increase rates to up to 3.85%.