Inflation figures on Wednesday aren't expected to stop the Reserve Bank of Australia from cutting the cash rate but the falling Australian dollar might.
The consumer price index (CPI), the key measure of inflation, is forecast to have risen by 0.5 per cent in the three months to December, for an annual rate of 2.5 per cent, an AAP survey of 14 economists shows.
Inflation came in higher than expected in the September quarter at 1.2 per cent - economists had forecast a quarterly rise of 0.8 per cent - driven by rising house prices.
Another unexpectedly high figure in December could see the end of the RBA's easing bias while a lower-than-expected figure could spur another cash rate cut when the central bank's board meets in February, JP Morgan chief economist Stephen Walters said.
HSBC chief economist Paul Bloxham said inflation was expected to remain benign but not low enough to see the RBA consider any near-term rate cuts from the current record low of 2.5 per cent.
"The big focus for the RBA has been on the currency in recent months and they got their Christmas wish, the currency is down at the sorts of levels that the RBA governor was hoping it would be," he said.
The median forecast for underlying inflation, which excludes volatile price movements, is 0.6 per cent in the December quarter and 2.3 per cent over the year to December.