Australia’s inflation rate has unexpectedly decreased, providing a glimmer of hope for mortgage holders as the Reserve Bank of Australia (RBA) considers its next interest rate decision. The Australian Bureau of Statistics reported on January 6, 2026, that the consumer price index fell to 3.4 percent in November, down from 3.8 percent in October. This figure came in below economists’ expectations, which had predicted a decrease to 3.6 percent.
The decline in inflation may influence the RBA’s next monetary policy meeting, scheduled for February 3, 2026. Although the headline inflation rate has dropped, the central bank remains cautious. The RBA focuses on the trimmed mean inflation measure, which excludes volatile price changes, and this figure only slightly decreased from 3.3 percent to 3.2 percent. Both measures remain above the RBA’s target band of 2 to 3 percent.
Driving the headline inflation figure was a combination of factors, including the removal of energy rebates in Queensland. Electricity prices surged by 19.7 percent over the year leading up to November. While such temporary increases may not overly concern the RBA, other persistent cost pressures could draw their attention. For instance, new dwelling costs rose by 2.8 percent compared to the previous year, a notable increase from a 1.7 percent rise recorded earlier.
Despite these fluctuations, the RBA’s decision-making process will be bolstered by upcoming economic data. The December quarter inflation report, due for release in late January, will provide further insights into trends and conditions affecting the economy.
Warren Hogan, chief economic adviser at Judo Bank, expressed skepticism about the RBA’s current interest rates. He stated, “There’s less than a quarter of the CPI basket that is below the RBA’s target band. 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.” Hogan advocates for an increase in interest rates during the February meeting, emphasizing the need for proactive measures amid rising costs.
As inflation data continues to show notable variations, mortgage holders in Australia remain cautiously optimistic. The RBA’s upcoming decisions will significantly impact borrowing costs, shaping the financial landscape for many Australians in the coming months.
