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Summary:November CPI flat m/m, softer than Westpac expectedAnnual CPI eased to 3.4%, below forecastsDownside risk to December-quarter inflation outlookEnergy rebates again distorted electricity pricesWestpac sees RBA holding rates in FebruaryAustralia’s inflation pulse cooled more sharply than expected in November, a result that Westpac says should provide reassurance to the Reserve Bank of Australia that further policy tightening is not required in the near term.The latest Australian Bureau of Statistics data showed headline CPI was flat in the month, significantly weaker than Westpac’s near-term forecast for a 0.4% rise. On an annual basis, the new Complete Monthly CPI eased to 3.4% year-on-year in November, well below Westpac’s 3.8% estimate and softer than market expectations.Westpac said the weaker-than-expected outcome introduces downside risk to its current December-quarter inflation forecasts, which sit at 0.6% quarter-on-quarter for headline CPI and 0.8% for the trimmed mean. If confirmed following a full review of the monthly detail, the bank believes the data should be sufficient to comfort the RBA ahead of its February meeting, reducing the likelihood of a rate hike.The softer print was driven by a combination of weaker electricity prices and declines across several discretionary categories. Electricity prices rose far less than anticipated in the month, while household contents and services, clothing and footwear, and health all fell more sharply than Westpac had expected. Transport prices also rose more modestly. These declines were partly offset by firmer increases in food prices, rents, new dwellings and communications.Energy rebates continued to play a significant role in shaping the inflation profile. Electricity prices were up 19.7% over the year to November, but Westpac noted this reflected the dampening impact of state and federal rebate schemes. Excluding those rebates, the ABS estimates electricity prices rose 4.6% year-on-year, slightly slower than in October and consistent with annual price resets by energy retailers in mid-2025.Underlying inflation also edged lower. The trimmed mean rose 3.2% year-on-year in November, easing from 3.3% previously, while the monthly increase held steady at 0.3% — a pace Westpac notes has been consistent for several months.Looking ahead, Westpac expects the inflation pulse to continue moderating through 2026, outside of volatile items, administered prices and known supply shocks, reinforcing the case for the RBA to remain on hold in coming months. The Australian dollar has added to recent gains after the data, trading above 0.6760.—Reserve Bank of Australia meeting dates for the year ahead:
This article was written by Eamonn Sheridan at investinglive.com.
💡 DMK Insight
Australia’s November CPI data just dropped, and it’s a game changer for traders: With the annual CPI easing to 3.4%, below forecasts, this signals a cooling inflation trend that could influence the RBA’s monetary policy. If the RBA holds rates in February, as Westpac suggests, it could lead to a stronger AUD against other currencies, especially if global inflation remains sticky. Traders should keep an eye on the energy sector, as rebates are distorting electricity prices, potentially masking underlying inflation pressures. This CPI report could also ripple through the forex market, impacting pairs like AUD/USD. If the AUD strengthens, it might create short-term opportunities for day traders looking to capitalize on volatility. Watch for key resistance levels around recent highs, and consider how this data might influence broader market sentiment. The real story here is how the RBA’s decisions will shape the landscape for the next quarter, so keep your charts updated and monitor the economic calendar closely for any shifts in sentiment.
📮 Takeaway
Watch for the RBA’s February rate decision; a hold could strengthen the AUD, impacting pairs like AUD/USD.
