Annualised inflation slowed to a pace of 4.3% in the 12 months to November, and we'll have to wait until 31 January to confirm if December's annualised figure has a rate beginning with a 3, as has been mooted

Jessica Amir, market strategist at fund managers Moomoo, said the price of oil and shipping insurance costs have spiked in recent weeks.

"Oil is up 2.4% in five days with supply disruptions as shippers are told to avoid the Red Sea amid attacks," Ms Amir said.

Iran-allied Yemeni rebel group Houthi have repeatedly attacked vessels passing through the Red Sea, and the US has responded by launching missile attacks against these groups. Some ships have copped collateral damage as a result.

"Vessels passing through the Red Seas are now paying 1% insurance costs- - that’s a big deal as 12% of world trade passes through the region," Ms Amir said.

"If you have a $100 million vessel - it will cost you $1 million in ‘war insurance’."

Many vessels are now avoiding the Suez Canal and Red Sea, opting to sail around South Africa's Cape of Good Hope, which adds to fuel costs and takes an extra 10-12 days.

Outside of Red Sea and Suez Canal woes, transpacific shipping costs are up 243% year-on-year, according to Ms Amir. 

That passes on to services inflation, such as petrol prices, which has proven harder to budge in the face of tightened monetary policy. 

NAB economists recently changed their tune, forecasting an RBA rate hold at February's meeting - despite quarterly inflation yet to come out.

NAB also expects underlying inflation to accelerate in the first three months of 2024 with rent subsidies dropping out (aiding to services inflation).

"There are increasing signs that goods disinflation may occur more rapidly than expected. In the near term this will be a key offset to still strong services inflation," NAB chief economist Alan Oster said.

Labour and wage pressures

Domestically, today's unemployment figures showed a meagre uptick in the unemployment rate from November to December - from 3.87% to 3.88% -  typically a time many find themselves unemployed for a short period when transitioning jobs or taking extended breaks.

This was largely in-line with forecasts but the wild swings in employed/unemployed have become hard to call.

The number of Australians in full-time employment fell 106,600 last month, while the number in part-time employment grew by 41,400.

A four-tenths percentage drop in the participation rate to 66.8% tempered the effects of the wild swings in employment.

"The growing popularity of Black Friday sales has now meant a lot more hiring is done in the month of November rather than December. This is a recent phenomenon," said Gareth Aird, CBA's head of Australian economics.

"As a result, the ABS hasn’t been able to capture the evolving seasonal pattern in their seasonal factors for employment."

The central bank forecasts unemployment to rise to 4.5% by the end of this year, but wage pressures remain close for RBA comfort, according to NAB economists.

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