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Australian consumers and businesses, already hit by the rapid spread of the Omicron variant of COVID-19, now face the risk of an interest rate rise by the Reserve Bank this year after a surprisingly strong set of inflation figures.

The annual consumer price index jumped to 3.5 per cent in the December quarter and above the RBA's two-to-three per cent inflation target, led by rising costs of new housing and petrol prices.

The Australian Bureau of Statistics said annual underlying inflation - which smooths out wild price swings and is more aligned to interest rate decisions - rose to 2.6 per cent, up from 2.1 per cent in the September quarter.

ABS head of prices statistics Michelle Marquardt said this was the highest level since 2014, reflecting the broad-based nature of price increases, particularly for goods.

Economists had expected a more modest rise in annual underlying inflation to 2.4 per cent.

It was also stronger than the 2.25 per cent the RBA had been expecting at this stage and had not predicted it reaching 2.5 per cent until mid-2023.

The inflation report came just days after figures showed the unemployment rate unexpectedly dropping to a 13-year low of 4.2 per cent - again a faster decline than the RBA had expected in its most recent forecasts made in November.

EY chief economist Jo Masters believes it is looking increasingly likely the RBA will start raising the cash rate from a record low 0.1 per cent late this year, but its actions will be data dependent.

"They will want to be assured of inflation remaining within their target band of two to three per cent and an acceleration in wages growth to be under way," she says.

Financial markets are betting on a move around the middle of the year.

Economists at Barclays expect it will put an end to the central bank's bond buying program at Tuesday's monthly board meeting, the first of 2022.

Business confidence has already taken a massive hit from Omicron and even before having to worry about rising borrowing costs.

The National Australia Bank's monthly business survey for December showed confidence tumbling by 24 points to an index of minus 12 from plus 12 the previous month.

Business confidence - a guide to future hiring and investment - was down in every state.

"The confidence index fell below the level recorded at the beginning of the Delta outbreak, showing just how concerned business are about the current virus wave," NAB chief economist Alan Oster said.

While business conditions also fell three points, they remained just above the long-run average at eight index points.

"Overall, the December survey results are consistent with an economy that's starting to slow," Mr Oster said.

"That probably means conditions will fall in early 2022. However, we don't expect the Omicron variant to derail the recovery longer-term."

Meanwhile, consumer confidence has stabilised after a rocky start to 2022, buoyed by the fall in the unemployment rate, although concerns about the inflation outlook remained elevated.

The weekly ANZ-Roy Morgan consumer confidence index - a pointer to future household spending - rose 2.2 per cent, partly recovering from its 7.6 per cent tumble the previous week, which was the weakest January result since 1992.

ANZ head of Australian economics David Plank said the recovery came in the same week as the jobless rate fall and amid signs that COVID-19 cases appeared to have peaked.

The survey's consumer inflation expectations rose 0.1 percentage point, returning to a recent seven-year high of five per cent.

© AAP 2022

Nine-year-old Charlise Mutten was shot dead before her body was dumped in a barrel in bushland in the Blue Mountains.

Homicide squad commander Detective Superintendent Danny Doherty said an extensive post mortem had revealed how the girl died.

The child's disappearance while holidaying at Wildenstein Private Gardens at Mount Wilson was reported on January 14, triggering an intensive five-day search of bushland until her body was discovered a week ago, in a barrel dumped near the Colo River northwest of Sydney.

"Charlise ... suffered a fatal gunshot wound and that's how she died," Det Supt Doherty told reporters on Tuesday, describing it as an "unimaginable" murder of a child.

Investigations are continuing and the crime scene at Mount Wilson is ongoing.

According to court documents, Charlise was killed days before she was reported missing.

Justin Laurens Stein, 31, faced court last week charged with murder after being arrested at a Surry Hills unit in inner Sydney.

Police have interviewed Charlise's mother Kallista who provided a formal statement that she was not present at the property at the time of the murder and corroborated other key evidence.

Police say there was no evidence that puts her at the property at the time of the murder.

Stein was alone with Charlise on the night of her murder, Det Supt Doherty said.

Police have released CCTV footage of a red Holden Colorado ute that was seen driving around and towing a boat in the inner Sydney suburb of Drummoyne followed by the northern areas of Wisemans Ferry and Colo River.

They allege Stein had previously tried to float a "covered up" boat at an inner-Sydney dock after buying sandbags from a hardware store, before travelling back to the Colo River.

A plastic barrel was missing from the property indicating a "high probability" of the murder taking place at the remote estate near the Blue Mountains, Det Supt Doherty said.

Police are appealing to anyone who may have seen suspicious activity in those locations.

"We're working on behalf of Charlise. We're trying to provide answers to her family and deliver justice on her behalf more importantly".

© AAP 2022

Outgoing Australian of the Year Grace Tame and Prime Minister Scott Morrison have had an awkward meeting in Canberra.

Attending Tuesday's Australian of the Year Awards morning tea, Ms Tame stood stony faced for a photograph next to the prime minister at The Lodge.

She appeared to reluctantly shake Mr Morrison's hand without meeting the prime minister's eyes.

Ms Tame is a survivor of child sexual abuse and has been vocal in her criticism of the coalition government's response to women's safety issues.

Opposition Leader Anthony Albanese later thanked Ms Tame for her "quite extraordinary courage and her fierce advocacy".

"Grace, you've inspired countless Australians and you've earned enormous respect," he said during an address to the National Press Club.

"The events that occurred in parliament ... constituted a powerful wake-up call.

"But we've had so many wake-up calls. We have no excuse to wait for another."

Liberal senator Hollie Hughes tweeted Ms Tame's demeanour during the meeting with Mr Morrison was "immature!"

LNP senator James McGrath criticised Ms Tame for being "partisan, political and childish".

"The important issues raised by last year's Australian of the Year must continue to be addressed by all of us," he wrote on Facebook.

"It is a pity her behaviour and attacks on our prime minister are so partisan, political and childish.

"If she didn't like being Australian of the Year she should hand back the honour."

The Morrison government came under intense and sustained fire for its handling of the alleged 2019 rape of former Liberal staffer Brittany Higgins in a federal minister's office, made public in February last year.

Ms Tame has said the government "doesn't get it", following its subsequent failure to pass all legislative reforms recommended by Sex Discrimination Commissioner Kate Jenkins.

© AAP 2022