The chances of a pre-election rate cut increased sharply on the release of softer-than-expected inflation data, firming the prospect of an April poll date and giving Labor a boost ahead of a campaign to be fought on cost-of-living pressures.

After new data showed underlying inflation tumbled from 3.6 per cent in September to 3.2 per cent in December – its lowest rate in three years –bond market investors became almost certain the Reserve Bank of Australia board would deliver its first rate cut since November 2020 when it meets next month.