Economists are optimistic Australia’s sky-high inflation will start to come back to earth after the release of fresh data on the cost-of-living crisis.

The Australian Bureau of Statistics will unveil Consumer Price Index (CPI) figures for the December quarter on Wednesday amid soaring costs for many household staples.

Commonwealth Bank analysts are forecasting inflation to jump 1.7 per cent over the quarter, up from an increase of 1.3 per cent for the same period a year earlier.

“We’re knocking out a smaller number with a bigger number so, as a result, we’re going to see stronger annual growth,” CommSec chief economist Craig James told the bank’s podcast.

In its November meeting minutes, the Reserve Bank of Australia said it expected headline inflation to peak around eight per cent and underlying inflation to top out at 6.5 per cent at the end of 2022 before both begin to fall early this year.

No update was made to either forecast following its meeting in December.

Mr James said annual inflation growth was likely to rise to 7.7 per cent, well above the RBA’s target rate of two to three per cent.

But he agrees inflationary pressures are set to ease despite recent monthly data showing annual inflation surged back to 7.3 per cent in November after a weaker read in October.

As bad as it will get?

“We think the December quarter of last year, the last three months of 2022, was the peak in terms of inflation,” Mr James said.

The comments were echoed by Treasurer Jim Chalmers, who on Sunday said he expected the peak in inflation had passed although cost-of-living challenges remained.

On Thursday, ABS jobs data showed the national unemployment rate steadied at 3.5 per cent in December, suggesting the economy is slowing.

“By this time next year, we’re going to be in a totally different position,” Mr James said.

The RBA will be keeping a close eye on the latest inflation figures ahead of its meeting early next month to decide on a possible ninth consecutive interest rate hike.

Other economic data due out over the public holiday-shortened week includes CommSec’s latest quarterly State of the States report, weekly consumer confidence figures and producer and international trade price indexes for the December quarter.

Australian share futures gained 34 points, or 0.45 per cent, to reach 7428.

The benchmark S&P/ASX200 index finished up 16.9 points, or 0.23 per cent, to 7,452.2, its highest level since April 22, while the broader All Ordinaries gained 17.9 points, or 0.23 per cent, to 7,666.3.

-AAP