Underlying inflation dropped to its lowest rate in three years in the December quarter, strengthening the case for a pre-election rate cut next month.

Australian consumer prices rose at the slowest pace in almost four years in the December quarter, while a pullback in housing costs helped cool core inflation and open the door to a cut in interest rates as early as next month.

Inflation in Australia remained in retreat in the last quarter of 2024, stoking the case for the central bank to join the global easing cycle by cutting rates at its coming meeting in February.