Wednesday’s softer-than-expected quarterly consumer price index rise has increased the likelihood of a pre-election interest rate cut. The Reserve Bank of Australia’s preferred measure of underlying inflation fell from 3.6 per cent to 3.2 per cent in the December quarter. It’s the lowest inflation reading since December 2021, meaning the pressure on the bank to reduce rates next month from Treasurer Jim Chalmers and Labor-aligned commentators will continue.

The prospect of the first cut in the Reserve Bank’s cash rate since March 2020 would not be unreasonable and would serve as a more tangible demonstration that cost of living pressures are easing.