In what is good news for retailers and consumers inflation has fallen sharply to 4.9%, with analysts now tipping that the Reserve Bank will have a tougher decision ahead of the central bank’s last board meeting of the year on Tuesday.

Do they or don’t they spoil the Christmas shopping period with a rate hike that could crimp how much consumers spend over the holiday period.

The latest figures from the Australian Bureau of Statistics come after the RBA hiked rates to 4.35 per cent on Melbourne Cup Day, citing a growing concern that consumer price growth was proving stickier than hoped, and after surging energy and fuel prices drove annual inflation higher in August and September.

The consensus among economists was a fall in inflation to 5.2% with retailers welcoming the 4.9% which is still ahead the USA on 3.2% and the UK on 4.6%

Analysts have warned that the October data did not include many services, where price growth is proving stickier than in goods.

Excluding more volatile prices for items such as petrol, fruit and vegetables and holiday travel, inflation dropped from 5.5 per cent in the year to September, to 5.1 per cent, the ABS said.

There was still evidence that government subsidies were easing price pressures.

Rents were 6.6 per cent up in the year to October, but without additional commonwealth rent assistance would have been 8.3 per cent up.

Similarly, electricity prices were 8.4 per cent high in the latest figures, rather than the 19.7 per cent jump that would have been the case were it not the federal-state energy bill rebates for eligible households.

Michele Bullock the RBA governor claims that despite the “noise” generated by the public and politicians after 13 rate hikes, that “households and businesses in Australia are actually in a pretty good position”.

Investors are pricing in a 10 per cent chance of another rate rise next week, and economists believe that any further tightening is more likely to come in February.

Ms Bullock has said that the drivers of higher inflation are now “homegrown”, rather than coming from overseas developments, such as jumps in global oil prices.