The prospect of another interest rate hike in February has become more remote after inflation fell faster than expected.
The Australian Bureau of Statistics consumer price index for November came in at an annual rate of 4.3 per cent, down from 4.9 per cent in October.
The result was lower than consensus expectations of a 4.4 per cent rise in prices and the lowest monthly readout since the four per cent figure recorded in January 2022.
The surprise outcome will further cement expectations the Reserve Bank will keep the cash rate on hold at its next board meeting, with the rates market betting the monetary tightening cycle is already finished.
Treasurer Jim Chalmers welcomed the result but conceded inflation was still higher than the government would like.
"We are making progress in this fight against inflation, but (it) is not over yet," he told reporters on Wednesday.
"We know inflation is still the defining challenge in our economy and that is why dealing with these cost-of-living pressures is still the Albanese government's number one priority."
ABS head of prices statistics Michelle Marquardt said the most significant contributors were housing, food and non-alcoholic beverages, insurance and financial services, and alcohol and tobacco.
"The increase in Commonwealth rent assistance has reduced out-of-pocket rent costs for eligible tenants," Ms Marquardt said.
"Excluding these changes ... rents would have increased 8.8 per cent over the year to November."
ANZ senior economist Catherine Birch said housing remained the primary challenge to getting inflation under control, "with rental vacancy rates remaining very low, housing construction costs picking up again, and the waning effect of government credits on electricity prices".
Falling petrol prices were a major contributor as automotive fuel inflation slid to 2.3 per cent in the year to November, from 8.6 per cent in October.
Core inflation, which excludes volatile items such as fruit and fuel, dropped to 4.8 per cent from 5.1 per cent the previous month.
IG market analyst Tony Sycamore said the core measure falling below five per cent reinforced expectations the Reserve Bank would cut interest rates in 2024.
"If (December quarter inflation data) ... paints a similar picture, there is a good chance that expectations of the RBA's first rate cut are brought forward to June, with a third rate cut added into the rates market for 2024," he said in a note.
The inflation data followed a jump in retail trade for November, with Black Friday and Cyber Monday discounts driving sales up two per cent after a 0.4 per cent drop the previous month.
Clothing and footwear prices fell 0.9 per cent outright in November amid heavy discounting activity by retailers.
But the slowdown failed to impress shadow treasurer Angus Taylor, who argued inflation remained entrenched and persistent as a result of the Albanese government's policies.
"This week, the Treasurer's been patting himself on the back for wages growth of four per cent. But that means nothing when the price of everything else has gone up much higher," he said.
"Real disposable incomes are at an eight-year low, and living standards have fallen the most out of any OECD nation."
The November CPI release also included several indicators of all-important services inflation, such as takeaway food and recreational services, which has been a particular concern for the Reserve Bank.
RBA governor Michele Bullock in November pointed to price rises in services like hairdressers and dining out as a sign the inflation problem was now homegrown, rather than imported.
Hairdressing inflation cooled to 6.3 per cent over the year to November from 6.7 per cent in August, the last time data was recorded.
The figures will be pored over by the Reserve Bank board ahead of its next meeting, although quarterly CPI data due on January 31 will showcase a wider range of prices and play a larger role in its decision.
