Could inflation numbers signal an RBA rate rise next week?
The next RBA cash rate decision is on Tuesday.
The Australian Bureau of Statistics' latest annual inflation figure marks the 6th month where it sits above the RBA's target range.
The data show that inflation rose 3.8% in the 12 months to December 2025.
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How does inflation impact the RBA cash rate?
The RBA has a target range of 2%-3% for inflation. That's what it deems a healthy rate for the economy to grow at.
With multiple months now at or above above 3%, the RBA will likely consider hiking the cash rate next week when it meets for the first time in 2026.
The inflation figure is impacted by our spending. That's because the more we spend, the more the cost of things typically go up.
The RBA tackles rising inflation by increasing the cash rate. This way, we're putting more money towards costs like our home loans, meaning we have less to spend on other things: slowing down rising prices.
So what does that mean for the next RBA decision?
While the RBA generally likes to remain cautious and not make any rate decisions too quickly, it's widely anticipated the next meeting will see a rate hike.
Inflation can be difficult to wrangle and it often fluctuates. But after 6 months above 3% and the latest number the second time it's hit 3.8%, it looks like the RBA will feel the need to step in.
The next RBA cash rate meeting is on Tuesday (3rd February).
Sources
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