Inflation data released by the Australian Bureau of Statistics last week showed the annual increase in the monthly CPI was 3.8 per cent. The increase just for the month of December was 1 per cent.

Prepare for all the predictions that the Reserve Bank will increase rates at this week’s meeting, to contend with “higher than expected” inflation.

But before the RBA does that, let’s take a closer look. The inflation numbers seem high, until you realise the large monthly increase was driven almost entirely by holiday travel and accommodation.

You read that right. Almost all of the increase in inflation in December was because of higher holiday travel and accommodation prices. It accounted for a massive 98 per cent of the increase.

Who would have thought that holiday prices went up in December’s peak season?

The lion share of the increase in holiday travel and accommodation prices was for overseas holidays, which made up 71 per cent of the monthly increase,. Domestic holiday travel and accommodation made up 27 per........

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