Australia’s inflation rises to 3.5 percent, but reasons remain for RBA to hold

The inflation data shows an economy with prices accelerating well above what any central bank would be happy with, however, there remain good reasons for the RBA board to sit on their hands, writes KPMG Australia Chief Economist Brendan Rynne.

Inflation has risen higher than expected to 3.8 percent, up from 3.4 percent in the 12 months to December, sparking further uncertainty ahead of next week's rates decision. The trimmed mean measure, which is a better indicator of underlying inflation, also increased to 3.3 percent in December, a little higher than the 3.2 percent recorded last month, and also above the consensus expectation of 3.2 percent. On face value, the inflation data shows an economy with prices accelerating well abov...

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Authors: Brendan Rynne

Published Date: 29 January 2026