It’s the most wonderful time of the year. A great song by American crooner Andy Willams, to celebrate the Christmas season and the joy and festivities that follow.

Somewhere along the way, Federal Treasurer Jim Chalmers and the Reserve Bank of Australia must have missed the memo.

Driven by the mid-year budget update to be handed down next week, Chalmers announced an end to the controversial energy bill rebates that were first rolled out in mid-2023 to families and small business.

Controversial, not to the families in our region and across the country who were and are still in need of cost-of-living relief, but controversial in the sense that the rebates likely contributed to the headline yearly inflation rate of 3.8%.

Only a couple of months ago, many economists and pundits were positing just how many interest rate cuts there would be towards the end of 2025 and into 2026.

The Reserve Bank decided to hold interest rates at 3.6% in their December meeting this week, and in its statement said it was carefully watching how the economy was responding to three interest rate cuts over the last year.

If heightened spending continues over the Christmas break and well into January, what once seemed unfathomable might be a reality – that come the first week of February in 2026, we might have an interest rate rise.

When it comes to inflation, budgets and cost of living, it is never completely straightforward.

There are push and pull impacts, positives and negatives, pluses and minuses – it all depends on your perspective.

Previous interest rate cuts have provided some mortgage repayment relief for homeowners, and this has allowed greater flexibly within household budgets – a positive.

However, these rate cuts have also increased the ability (or at least the perceived ability) for prospective purchasers to buy a home.

This demand, still with the relatively scarce amount of houses for sale, has led to house prices in NSW increasing by 6.4% over the last year – a negative.

House prices going up? If you’re an existing homeowner looking to downsize, or utilise that equity to buy another property? A plus.

House prices going up? If you’re a first homeowner, living with your family, trying to move into your own house in the same region or suburb you grew up in? A minus.

Analysis from AMP chief economist Shane Oliver now says that cost-of-living pressures are tipped to continue into the 2030s when inflation and purchasing power finally gets back to pre-Covid levels.

This is because inflation continues to grow at a rate that is faster than wages, highlighted by 2020 when inflation was 4% greater than wages growth.

In the hustle and bustle of organising presents, meals and festivities at this time of year, we rarely think about where the economy might sit in three or six months’ time.

Whilst this news and analysis might not have been on the Christmas wish list, The Bugle’s View is that we should still rejoice in spending time with family and loved ones, reflecting on how we all survived and (hopefully) grew in 2025!