Inflation in Australia jumped to 3.8% in the year ending December, up from 3.4% the previous month, as strong price growth continued. The Australian Bureau of Statistics reported that housing and electricity costs played a big role. Rents rose 3.9% and electricity prices surged 21.5% after government subsidies ended. Holiday and accommodation prices also rose by nearly 10%. This pushed headline inflation above the Reserve Bank of Australia's (RBA) 2-3% target range. The RBA’s preferred trimmed mean inflation measure rose to 3.4% from 3% in the previous quarter. The rising inflation increases the chance of an RBA interest rate hike at their upcoming policy meeting on Tuesday, the first since November 2023. Financial markets had already predicted a 60% chance of a hike before the inflation data release. After the data came out, the Australian dollar bounced back above 70 US cents, reflecting the greater chance of a rate increase.