Borrowers could receive more interest rate relief early this year if inflation remains subdued and the economy struggles to soak up a growing labour market.
Two private sector surveys released on Monday point to another rate cut by Australia's central bank after its board resumes deliberations on monetary policy in February.
One survey showed inflation, as measured by the TD Securities-Melbourne Institute's gauge, rose by 0.5 per cent in December and by 2.4 per cent over the year.
Seasonal price rises for holiday and travel accommodation, increases in alcohol and tobacco, and new homes and flats purchased by owner occupiers were more than offset by the falls in fruit and vegetables, clothing and footwear, and meat and seafood.
However, the yearly rate was within the RBA's two to three per cent target for inflation.
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TD Securities Head of Asia-Pacific Research Annette Beacher said the survey showed price pressures were contained, auguring well for the next official consumer price index (CPI) report for the December 2011 quarter due January 25.
TD Securities is tipping the weakest quarterly CPI growth outcome since the March quarter of 2009, at a rise of 0.2 per cent.
That would be good news for the economy and could help pave the way for a 25 basis point cut in the Reserve Bank of Australia (RBA) cash rate to four per cent on February 7.
"However, should the board choose to pause and assess the outlook at the time, we will just shift our expectations into the March meeting, for an eventual mid-year cash rate target of 3.5 per cent," Ms Beacher said.
Prime Minister Julia Gillard said on Monday Australia's economy had sound fundamentals.
"We have growth, we have low unemployment, we have low debt and we have inflation within the RBA's target zone," she said.
"That means the fundamentals in our economy are strong and ... different to those in Europe."
Europe is on the back foot after credit ratings agency Standard & Poor's downgraded the sovereign debt ratings of nine of the 17 countries in the eurozone. France and Austria lost their triple-A ratings.
However, the outlook for Australian employment may not be so rosy.
An ANZ survey for December, measuring job advertisements in newspapers and online, suggests the official jobless rate would rise this year.
Total job ads were down 2.6 per cent lower from December 2010 - the first negative yearly growth rate since February 2010, the survey posted on Monday found.
"Indeed, the current trend rate of employment growth is unlikely to be fast enough to absorb the forecast growth in the labour force in the short term," ANZ head of Australian economics Katie Dean said.
ANZ is forecasting the unemployment rate to rise from 5.3 per cent to 5.5 per cent by mid-2012.
There was some good news in the latest home loan approvals figures, which rose for the eight consecutive month.
However, the Australian Bureau of Statistics figures also found approvals were 12 per cent lower than the average for the previous 10 years.
Housing Industry Association chief economist Harley Dale said interest rate cuts, short-term government stimulus and longer term policy reform was needed to sustain a recovery in the housing sector.
The RBA cut the cash rate in November and December from 4.75 per cent to 4.25 per cent on concerns about a sluggish local economy.
