Australia's latest inflation data has been released, with the overall inflation rate in November dropping from 3.8% in October to 3.4%, mainly due to electricity inflation nearly halving. It seems that inflation is easing, but will this cause the central bank to relax?

Not at all. Some analysts point out that idle capacity in the economy has almost disappeared, and the labor market remains very tight. What does this mean? It means the Reserve Bank of Australia still has reason to tighten policy in the coming days.

More importantly, if the fourth-quarter Consumer Price Index data released later this month shows that the trimmed mean inflation exceeds expectations, the central bank may start raising interest rates as soon as next month. In other words, although inflation has retreated, the central bank's policy stance will still depend on subsequent inflation trends. The impact on commodity markets and asset allocation warrants ongoing attention.