The Consumer Price Index (CPI) rose 3.8 percent in the 2025 calendar year, keeping upward pressure on mortgage interest rates following positive employment data last week.
The Australian Bureau of Statistics (ABS) said the annual CPI was up from 3.4 percent in November.
This consolidates the figure above the Reserve Bank’s comfort zone (2-3 percent) and makes further easing of interest rates unlikely in the short term.
The Reserve uses interest rates as a means of regulating the economy, and in particular to keep price increases under control.
ABS head of prices statistics Michelle Marquardt said the largest contributor to annual inflation in December was housing, up 5.5 percent.
This was followed by food and non-alcoholic beverages, up 3.4 percent, and recreation and culture, up 4.4 percent.
Annual “goods inflation” was 3.4 percent in the 12 months to December, up from 3.3 percent to November.
This was heavily impacted by the price of electricity, which rose 21.5 percent over the 12 months.
Annual “housing inflation” was 5.5 percent to December.
“Excluding the impact of the Commonwealth and State Government electricity rebates over the previous year, electricity prices rose 4.6 percent in the 12 months to December,” the ABS said.
“This was unchanged from the 12 months to November and reflects annual price reviews from energy retailers in July 2025.”
Rental prices rose 3.9 percent over the 12 months. However, annual inflation for rents eased over the past 12 months due to stable vacancy rates in most capital cities.
Prices for meat and seafood rose 4.4 percent in the 12 months to December. Prices for beef and lamb both rose by more than 10 percent over the past year, with strong overseas demand for Australian red meat leading to price rises.
Fruit and vegetable prices rose 4.0 percent in the 12 months to December, up from a 2.7 percent increase to November.
The full report is on the ABS website.
