Wednesday’s CPI inflation release for December was a shocker that, alongside the decline in the nation’s unemployment rate to 4.1%, suggests that the Reserve Bank of Australia (RBA) will hike the official cash rate at next month’s monetary policy meeting. AdvertisementAs a result, the RBA can’t directly influence administered prices with interest rates, since they are not market‑driven. Looking ahead, Australia’s CPI inflation will remain under pressure from rising energy prices. AdvertisementRBA rate hikes will merely treat the symptoms of inflation by squeezing other areas of the economy harder to bring overall CPI inflation down. Only genuine government policy action can treat the problem of soaring energy costs and administered price inflation.