Recent economic data hasn’t been great for convincing the central bank that inflation is on the way down. If the CPI comes in high this morning, watch out because rate rises might be next.

This is the last chance saloon shot for anyone out there hoping for no raising of rates by the Reserve Bank next Tuesday. The recent run of economic data hasn’t been great for convincing the central bank that inflation is on the way down. So, the Consumer Price Index out at 11.30am is a big deal.

While business and consumer confidence readings say the RBA shouldn’t be raising the cash rate from 3.6% to 3.85%, these numbers aren’t as important as the unemployment and inflation data drops.

Last week, the unemployment rate dropped from 4.3% to 4.1%, with economists expecting it to rise to 4.4%. That was a shocker for anyone hoping RBA boss Michele Bullock would ‘cease and desist’ with rate rises.

This good news story for job seekers was even better, with 65,000 jobs created in December that followed a weak November number. And most of these jobs were full time, which adds to the story that the Aussie economy is stronger than expected and a strong economy often increases inflation, rather than reducing it.

Remember if today’s inflation number is on the slide, then the RBA could sit on its hands next Tuesday when they next decide what rate we pay for loans. However, if the December quarter CPI is 0.9% or greater, then we could be looking at a rate rise next week. While this would mean annual inflation would be 3.7%, the central bank wants this measure of price increases in the 2-3% band.

In fact, the bigger focus will be on the trimmed mean for the CPI. Here if the rise is 0.9%, the annual underlying inflation would be around 3.3%.

And this is the number economists, the RBA and yours truly will be watching closely.

If the trimmed mean comes in under 3.3% for the year, then rate worriers should breathe a sigh of a relief.

If it’s bigger than 3.3%, those with a mortgage will be tightening their belts after Tuesday because your lender will be notifying you about a rate rise.

Looking at who says what, the banking economists are largely expecting rates on hold. However, there’s a big number tipping rate rises this year. On the other hand, the likes of Westpac (led by Luci Ellis, who was passed over for the top RBA job that went to her colleague Michele Bullock) would love to show her rival banking chief economists that she knows more about the Aussie economy than them.

And for the sake of the economy and those in debt, I hope Ellis shows herself as the best forecaster in town. Go Luci!