ABS' latest monthly Consumer Price Index (CPI) rose 2.5%, similar to December figures.
The Wednesday print fell a touch short of the 2.6% uplift the market had expected for the first month of 2025.
Economists had forecast a slight uptick in headline figures on the back solid rise in electricity prices as energy rebates are increasingly used up.
Since the introduction of the first instalment 2024-25 Commonwealth Energy Relief Fund (EBRF) in July 2024, electricity prices have generally pulled headline inflation down.
January CPI delivered a similar outcome, revealing electricity prices were down 11.5%.
Excluding all energy rebates, however, it would have been a shallower 1.2% fall.
Notably, the fall in electricity prices in January is lower compared to the prior month's 17.9% decline as most energy concessions, including Queensland's one-off $1,000 energy rebate have already wound up.
"This rebate exceeded the average electricity bill for Queensland households. The impact of the rebates was lower in January than December as some households had exhausted the full value of the rebate," said Michelle Marquardt, ABS head of price statistics.
Annual trimmed mean inflation rose 2.8%, up slightly from 2.7% in December.
Food inflation accelerates
January's annual inflation was largely driven by price increases in food and non-alcoholic beverages, which was up 3.3%.
The largest contributor was fruit, with prices 12.3% higher compared to a year ago.
Berry prices remained elevated following poor growing conditions in mid-2024, while lower supply of avocados, mangoes, and citrus fruit pushed prices higher.
Overall, all grocery items in the category, except dairy increased throughout the year to January.
Bread and cereal products were up 3%, meat and seafood up 4.7%, and non-alcoholic beverages up 2.7%.
See also: Grocery Price Index
Housing inflation slows
Prices in the housing category rose by 2.1% in the 12 months to January, up from 1.5% in December.
This was driven largely by the increases in electricity prices for those Queensland households that had used up the state energy concessions.
Meanwhile, rent prices rose 5.8%, slower compared to the 6.2% rise recorded in the month prior, with the ABS noting the "easing rental price growth reflecting recent increases in vacancy rates across most capital cities".
CoreLogic earlier reported in its monthly Home Value Index (HVI) that rental growth posted a modest 0.4% uplift in January, following a subdued second-half 2024 results.
"Every capital recorded a subtle rise in rents over the month, however, the trend is clearly pointing to an ongoing easing in rental price growth," CoreLogic research director Tim Lawless said.
Similarly, new dwelling prices eased to 2%, following a 2.3% rise in December, marking the lowest annual rise since June 2021.
"The slowing in annual new dwellings inflation is due to project home builders offering discounts and promotional offers to entice business, as well as improvements in the supply of materials and labour," Ms Marquardt noted.
Does this mean another RBA rate cut?
Economists believe Wednesday's CPI data supports the RBA's forecasts to bring trimmed mean inflation to 2.7% by the second half of 2025.
NAB's head of markets economics Tapas Strickland said this should see the Board cutting rates again following the cash rate cut delivered in February.
However, it won't be until the third meeting in May.
"The better inflation narrative (relative to the RBA's forecasts) remains on track. This should see the RBA cut rates in May," Mr Strickland said.
"Thereafter much will depend on the outlook for activity and the labour market, and at least today's reports do not suggest much pass-through occurring from the lower AUD or other cost growth."
RBA Governor Michele Bullock said that monetary policy will remain restrictive, even after Australia's cash rate was reduced to 4.10%.
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