Australian Inflation Holds at 3.8% in January, Underlying Measure Ticks Higher

Australia’s headline inflation rate remained unchanged at 3.8% in January (seasonally adjusted), but underlying price pressures edged higher a result slightly hotter than economists had expected.

The trimmed mean inflation rate, the Reserve Bank of Australia’s preferred gauge of underlying inflation, rose to 3.4%, up from 3.3% in December. Markets had anticipated headline inflation to ease to 3.7% and the trimmed mean to remain steady.

The data arrives just three weeks after the RBA lifted interest rates by 0.25 percentage points, warning that inflation was likely to stay above target “for some time.” The bank’s assessment has since fuelled political debate in Canberra over who bears responsibility for persistent cost‑of‑living pressures.

What’s Driving Prices Higher
The ABS said the biggest contributor to annual inflation in January was:

Housing: up 6.8%

Recreation and culture: up 3.7%

Food and non‑alcoholic beverages: up 3.1%

The hotter‑than‑expected figures will likely reinforce the RBA’s concern that inflationary pressures remain sticky, complicating the path toward bringing inflation back within the 2-3% target band.