Weekly Business & Economy Digest — Australia
📊 Inflation still easing but core pressures remain
Australia’s inflation has continued to slow, with the annual Consumer Price Index rising 3.4% in November 2025 — softer than earlier months but still above the Reserve Bank’s target range of 2–3 per cent. Underlying inflation (trimmed mean) also eased slightly, but price pressures in housing and other services remain persistent. These figures suggest inflation is cooling, yet not enough for immediate interest rate cuts.
💼 Small business credit demand increases
Recent data shows business credit demand grew 5.1 per cent year-on-year in December 2025, with retailers particularly active in securing asset finance. Strong tourism-related consumer spending and investment in technology are contributing to this shift from cost-cutting to investment — although some small firms still face cash flow pressures.
📈 Labour market remains strong, complicating rate outlook
Australia’s labour market surprised economists with a significant drop in unemployment to around 4.1 per cent, alongside stronger than expected job growth. This strong employment data has led some analysts to raise the possibility of interest rate increases rather than cuts, as tight labour conditions can keep inflation higher for longer.
🏦 RBA’s interest rate stance still cautious
Although headline inflation has moderated, the Reserve Bank of Australia (RBA) continues to take a cautious approach, influenced by sticky price pressures and ongoing economic uncertainties. Many market forecasts now suggest that the RBA may hold rates steady into 2026 rather than cut them earlier.
🔎 Other economic developments
• APRA supervision of super funds — The Australian Prudential Regulation Authority is increasing scrutiny of superannuation trustees’ spending to ensure it aligns with members’ best interests.
• Global geopolitical influence — Analyses suggest events like the US election could significantly shape Australia’s business and trade outlook, reinforcing the importance of international economic ties (Commonwealth Bank/US Studies Centre).
• ATO tax collections rise — Corporate tax receipts reached record levels, reflecting stronger profitability or changes in tax compliance/reporting.
• SME economy complexity — Reports highlight that Australia’s small business landscape varies widely by region and sector, creating a “two-speed” economy.
• Retail spending remains modest — Despite Stage 3 tax cuts and wage gains, retail sales have shown only minor growth, raising concerns about broader GDP performance.
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