The Australia Institute’s Chief Economist Greg Jericho says if the RBA had hiked rates today in response to the most recent inflation data, it would have been a brutal knee-jerk reaction, especially with real wage growth slowing.

He says the slight uptick in inflation is likely to be short-term, due to the ending of government power bill subsidies.

“The inflation increase in October, from 3.6% to 3.8%, was largely a one-off response to the ending of power bill subsidies. That isn’t a trend,” said Greg Jericho, Chief Economist at The Australia Institute.

“The truth is, market predictions of rate hikes and cuts will swing with new data on inflation, economic growth, real wages and unemployment.

“The RBA has chosen to wait and see. That’s at least a small mercy for mortgage holders a fortnight out from Christmas.”