The Balancing Act: Decoding the December 2025 CPI Report
In the world of Forex trading, inflation data is the ultimate compass. On January 23, 2026, the latest Consumer Price Index (CPI) report for the December 2025 quarter was released, revealing a 0.6 percent quarterly rise and a 3.1 percent annual increase. While a 3.1 percent annual figure might seem modest to some, it pushes inflation just above the preferred target band of most central banks, including the Reserve Bank of New Zealand.
For those exploring Forex trading for beginners, this report is a golden opportunity to see how specific price movements—from petrol to electricity—can ripple through the markets and influence the value of currency pairs like the NZD/USD or GBP/JPY.
1. The Quarterly Snapshot: Travel and Energy Lead the Way
The 0.6 percent rise in the final quarter of 2025 was driven by a few heavy hitters.
International Air Transport (Up 7.2%): Representing 20% of the total quarterly rise, the cost of flying abroad surged during the holiday season.
Petrol (Up 2.5%): Energy costs remain a persistent pressure, contributing significantly to the overall index.
Telecommunications (Up 2.8%): Services like mobile and internet data also saw a notable price hike.
Conversely, the "cost of living" was slightly eased by a massive 16.5 percent drop in vegetable prices, proving that seasonal supply can sometimes provide a much-needed cooling effect on the headline numbers.
2. The Annual Trend: Housing and Utilities Under Pressure
Looking at the 12 months leading to December 2025, the 3.1 percent rise tells a story of domestic cost pressures.
Electricity (Up 12.2%): This was a primary driver for the year, hitting households hard.
Local Authority Rates (Up 8.8%): Increasing costs from local governments added to the burden.
Housing Rentals (Up 1.9%): While slower than in previous years, rent continues to be a steady upward force.
At Global Markets Eruditio, we teach that annual inflation is what central banks use to decide interest rates. When rates for electricity and housing climb, the bank is more likely to keep interest rates high to cool down the economy.
3. Tradeable vs. Non-Tradeable: Why the Distinction Matters
In Forex trading, we often categorize inflation into two buckets: Tradeable and Non-Tradeable.
Tradeable Inflation (Up 2.6%)
This measures goods and services influenced by foreign markets, such as imported electronics or international travel.
Leaders: Meat and poultry (up 12.1%) and overseas accommodation (up 9.0%).
Laggards: Audio-visual equipment (down 18.6%), as global manufacturing efficiencies keep prices low.
Non-Tradeable Inflation (Up 3.5%)
This measures domestic demand—items that don't face international competition, like local rates or electricity. This is often seen as a better indicator of the "true" internal health of an economy. Because non-tradeable inflation is higher (3.5%), it suggests that domestic demand is still quite robust, which can be a bullish signal for the local currency against the US Dollar (USD).
4. Market Reaction and the "Single-Economy" Effect
When inflation hits 3.1 percent—just above the target—traders expect the central bank to remain "hawkish" (keeping rates high). This typically makes a currency more attractive to hold. For instance, if the Canadian Dollar (CAD) is weakening while New Zealand inflation stays sticky, you might see significant movement in the NZD/CAD cross.
Understanding these nuances is what separates a professional trader from a gambler. At GME Academy, we focus on turning these "dry" statistics into actionable trading insights.
Turn Economic Data Into a Trading Opportunity
The difference between a "price hike" and a "profitable trade" is education. Don't just watch the news—learn to anticipate it.
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Join our FREE Forex Workshop today. We’ll break down the latest CPI data, explain the mechanics of tradeable inflation, and show you how to navigate the volatility of major currency pairs like a pro.
