Price pressures are subsiding yet the squeeze on household budgets is set to linger, with rate cuts not expected until later in the year.

The Australian Bureau of Statistics consumer price index eased to 4.1 per cent, down from 5.4 per cent at the last quarterly update in September, and coming in slightly lower than consensus forecasts.

The better-than-expected December quarter consumer price data has fuelled hopes of an end to the inflation-fighting interest rate hiking cycle.

Economic teams at all four of the big banks expect no more rate hikes and the cash rate to remain on hold where it is at 4.35 per cent.

Rate cuts are also forecast for the back half of the year yet the timing differs across the four banks, with Westpac pencilling in the earliest start of August.

Commonwealth Bank sees cuts starting in September, National Australia Bank in November, and ANZ expects an easing cycle to start sometime in the December quarter.

Despite the welcome news on inflation, households are still under financial pressure, with the federal treasurer acknowledging the pain people were feeling.

Treasurer Jim Chalmers said the government’s reworked stage three tax cuts, which aim to redistribute tax relief so the benefits are skewed toward lower and middle-income earners, would further ease pressure on families.

“Every Australian taxpayer will get a tax cut, but for 84 per cent of Australians, it’s a bigger tax cut to help deal with cost-of-living pressures, which are still there, despite this really welcome and encouraging data that we are receiving today,” he said on Wednesday.

But Shadow Treasurer Angus Taylor said “robbing Peter to pay Paul” would not fix the situation.

“They’re completely incapable of doing the things you have to do to manage an economy to have the sort of standard of living that Australians had just over 18 months ago,” Mr Taylor told reporters on Wednesday.

He said strong economic management included containing spending, keeping immigration in line with housing supply, and focusing on competition policy.

By Poppy Johnston in Canberra