"Today's data shows rising inflation is a serious threat which the government must take seriously heading into this year's budget," said Innes Willox, Chief Executive of Australian Industry Group.
The consumer price index rose by 3.8% p.a. in December 2025, up from 3.4% in November. Across the fourth quarter, the CPI rose 3.6% while trimmed mean inflation rose 3.4%. All inflation measures are above the RBA's target band of 2-3% and are rising.
"Inflation in Australia is clearly no longer under control nor moving in the right direction," Mr Willox said.
"While in mid-2025 this could be attributed to the roll-off in household energy subsidies, we are now looking at broad-based inflationary pressures across the economy.
"Australians do not need reminding of the pernicious effects of high inflation on households and businesses alike. The experience of 2022 and 2023, which saw real wages fall and business costs explode, cannot be allowed to happen again in 2026.
"The Federal Government needs to take the threat of rising inflation seriously in the forthcoming budget. Soaring federal spending, which will rise to 26.9% of GDP this financial year — its highest level since the mid-1980s, is a major driver of both inflation and deteriorating budget sustainability.
"Moderating the future path of government spending is critical to ensure inflation does not become entrenched and the budget is returned to balance," Mr Willox said.
