Higher consumer prices in last month of 2011 proved the Australian central bank's contention that inflation worries could dominate the initial months of 2012, latest economic indicators showed.

According to the new TD Securities-Melbourne Institute survey issued on Monday, consumer prices soared in December as Aussies splurged on holiday expenses that mostly drove up of costs of travel and accommodation.

The same data also revealed that the holiday spirit not only spurred travel and vacation moods for many in Australia but also a great number of families used up their savings in snapping up their dream houses.

Last month saw too spikes in prices of alcohol and tobacco, according to the monthly inflation gauge, spurring for a December inflation jump of 0.5 percent after an improvement of 0.1 percent in the previous month.

The new report also indicated that the country's inflation levels in the past 12 months leading to December was pegged at 2.4 percent, closely hovering within the range of two to three percent set by the Reserve Bank of Australia (RBA) as the country's ideal target band.

Yet tightening situations, both here and abroad, prompted the RBA to implement rates cut back over the last two months of 2011, while at the same time not ruling out the likelihood that more cash rate reductions will be seen this year.

From its current level at 4.25 percent, economists have forecasted of further rate slices in the months ahead, with a new one set to be unleashed by the RBA in February as the global economic environment, mainly in Europe, continues to unsettle the country's policy managers.

As the holiday revelries pushed up the prices of consumer goods and services, the new TS Securities report noted that some gains were recorded in key areas such as food and clothing sectors.

Price improvements were seen in clothing and footwear, meat and seafood and fruits and vegetables, with the latter posting dipping prices of 2.1 percent and 4.7 percent in November and December respectively.

Rise in global usage for the holiday season dictated for higher fuel prices in the month, with the effects reflected on pump prices in much of Australia, which experts said could further surge ahead as tensions in the Gulf regions remain high.

Overall, the new data pointed to a weakening inflation trend for the better part of 2012, according to TD Securities head of Asia-Pacific Research Annette Beacher, unlike in the past year, in which "price pressures were well contained (most notably) in the final months."

"We forecast headline inflation to increase by 0.2 per cent, to be 3.3 per cent higher than a year ago ... and we also forecast underlying inflation to increase by 0.2 per cent in the December quarter, lowering the annual rate to 2.1 per cent," the Australian Associated Press (AAP) quoted Beacher as saying in the TD Securities report.