The inflation rate dropped more than expected after October inflation hit 3.8 per cent, but is still above the RBA’s target range of 2-3 per cent.
Forecasters will be confident the cash rate will remain steady at the RBA’s February meeting, however it could rise again later in the year, said Bank of Queensland chief economist Peter Munckton.
If inflation spiked, economists had warned it would be a sign that an interest rate was coming within weeks.
Underlying inflation dropped slightly to 3.2 per cent, which was in line with economists’ expectations.
December’s quarterly inflation report, released in late January, will inform the RBA’s deliberations during the early February meeting.
Forecasters will be confident the cash rate will remain steady at the RBA’s February meeting. (Getty)
“The next CPI release includes the quarterly data and will have a more significant impact on near-term inflation views (and therefore the cash rate outlook),” Munckton added.
The biggest drivers of annual inflation over the past 12 months have been housing, transport, food and non-alcoholic beverages, the ABS said.
However, furniture prices fell by around 4.6 per cent, mostly driven by Black Friday sales.
Inflation has eased once again in Australia. (AAP)
In its monetary statement, the RBA said it was carefully watching how the economy was responding to three interest rate cuts in the past 12 months.
Treasurer Jim Chalmers said at the time it was the “expected result”.
“A lot of Australians would have wanted some more rate relief but they wouldn’t have expected it,” he said.
“There was, in the estimations of the market and economists, no chance of a rate cut today and that is what we have seen in this decision taken independently by the Reserve Bank.”