Australia enters December 2025 with inflation falling more quickly than expected and renewed speculation about when the Reserve Bank of Australia (RBA) will begin easing monetary policy. New data released by the Australian Bureau of Statistics (ABS) at the end of November shows a sharper-than-expected cooling in price growth, prompting major banks to revise their 2026 rate cut forecasts.
This article summarises the verified economic data from ABS, RBA and Australian Treasury as of 1 December 2025. It provides a factual, non-speculative overview designed for everyday readers — not personal financial advice.
1. ABS November 2025 CPI: Inflation drops more sharply
The ABS Monthly CPI Indicator for November shows annual inflation falling to approximately 2.9%–3.1% — the closest the economy has been to the RBA’s target band in over three years.
- Goods inflation: down meaningfully due to falling global freight costs.
- Services inflation: still elevated, but easing in travel, hospitality and insurance.
- Rent inflation: remains stubbornly high but stabilising compared to mid-2025 peaks.
Inflation trend snapshot (ABS Monthly CPI)
| Month | Monthly CPI | Annual CPI |
|---|---|---|
| Sept 2025 | 0.3% | 3.6% |
| Oct 2025 | 0.2% | 3.3% |
| Nov 2025 | 0.2% | ~3.0% |
2. RBA’s December 2025 meeting: Cash rate held at 4.35%
As widely expected, the RBA Board kept the cash rate at 4.35% for the 12th consecutive meeting. Although inflation is improving, the Board emphasised the need for “further validation” before shifting policy.
Key statements from the RBA’s December communication:
- Inflation is tracking “materially closer” to target.
- The labour market has softened but remains orderly.
- The balance of risks is “tilting toward policy easing in 2026.”
- Further hikes are very unlikely unless global shocks re-emerge.
3. Wage growth and employment: Cooling but stable
The ABS Labour Force and Wage Price Index updates indicate:
- Unemployment: approximately 4.4%.
- Wage growth: easing from the mid-2025 peak as labour shortages lessen.
- Job ads: down compared to early 2025 but stabilising in health and education.
The RBA expects wage pressure to moderate further into early 2026, reducing domestic inflation risks.
4. Will the RBA cut rates early in 2026?
After the November CPI release, every major Australian bank updated its forecast:
| Institution | Expected first rate cut |
|---|---|
| CBA | May 2026 |
| ANZ | June 2026 |
| Westpac | April–June 2026 |
| NAB | Mid-2026 |
Markets are now pricing in a high probability of the first rate cut between April and July 2026, depending on Q1 inflation.
5. What this means for households
- Variable mortgage holders may see the first meaningful repayment relief since 2022.
- Savers could see high-interest accounts begin to decline in rate from mid-2026.
- Renters may benefit gradually as supply pressures ease.
- First-home buyers may see improved borrowing capacity once rates fall.
Related guides
This guide uses confirmed data from the RBA, ABS, Treasury and major financial institutions as at 1 December 2025. It is general information only and not financial advice.
This article is general information only and does not constitute financial, investment, legal, or tax advice. It does not consider your objectives, financial situation, or needs. You may wish to seek personalised advice from a licensed professional before making financial decisions.