Australia’s underlying inflation rate falls to 3.2% to bolster case for RBA rate cut next month

Lower rates of inflation could convince the RBA to start relaxing its squeeze on the Australian economy. Photograph: David Gray/Reuters

Australia’s underlying inflation rate has fallen to a three-year low of 3.2%, bolstering the case for a rate cut next month that would provide a dopamine hit to the government ahead of a cost-of-living election.

The Reserve Bank of Australia’s preferred inflation gauge, which strips out volatile price swings, fell to an annual 3.2% for the December quarter, down from 3.5%.