Activity on Elizabeth Street (at the intersection of Bourke St Mall), Melbourne on a cloudy day.<\/p>\n
Charlie Rogers | Moment | Getty Images<\/p>\n
Australia’s inflation came in at 3.6% in the fourth quarter of 2025, its highest level in six quarters, reinforcing warnings from policymakers that interest rate cuts this year are likely to be limited.<\/p>\n
The fourth-quarter reading was in line with expectations from economists polled by Reuters and up from the 3.2% seen in the third quarter. <\/p>\n
On a quarterly basis, inflation rose 0.6%, also matching the Reuters forecast and easing sharply from the 1.3% seen in the previous quarter.<\/p>\n
For December, inflation in Australia rose 3.8% year on year, exceeding the 3.55% expected by economists.<\/p>\n
The Australian Bureau of Statistics said housing was the largest contributor to the rise in December, with prices rising 5.5%.<\/p>\n
Prices of food and non-alcoholic beverages, as well as recreation and culture, also contributed to price gains during the month.<\/p>\n
‘Too high’ for rate cuts<\/p>\n The inflation reading follows recent comments from Reserve Bank of Australia Deputy Governor Andrew Hauser, who said<\/a> that inflation at current levels is “too high.” <\/p>\n “Inflation above 3%, let’s be clear, is too high. We’re charged to keep inflation between two to three per cent and it’s currently above that,” Hauser said in an interview with ABC on Jan. 8. <\/p>\n Hauser said the likelihood of further rate cuts in the near term was “probably very low.”<\/p>\n His remarks echoed comments from RBA Governor Michele Bullock after the RBA’s rate decision on Dec. 9, when she said that interest rate cuts were not on the horizon<\/a> for the foreseeable future.<\/p>\n