Inflation is down. Will you get a rate cut, or will the RBA hold again?
- Posted By Property Management team
Underlying inflation in Australia eased to 3.2% in the December quarter, the lowest since late 2021, down from 3.6% in the previous quarter. The Consumer Price Index (CPI) rose modestly by 0.2% for the quarter and 2.4% annually. Key price increases were in alcohol, tobacco, and recreation, while housing and transport offset these rises. The Reserve Bank of Australia (RBA) uses the trimmed mean measure to assess inflation, which grew by 0.5% in the quarter and showed an annual increase of 3.2%.
The CPI's modest rise is seen as a sign of easing inflation, with economists speculating that this could lead to an interest rate cut. Several major banks, including Westpac, CBA, and ANZ, predict a rate cut in February, while NAB expects changes later in May.
Electricity and fuel prices saw notable drops, contributing to the lower CPI. Food prices increased by 3.0% over the year, but price hikes slowed for most food categories, except for meat and seafood. The increase in tobacco and alcohol prices, along with rising travel costs, were other notable factors.
Treasurer Jim Chalmers described the figures as encouraging, signaling that inflation pressures are easing, though acknowledging continued financial strain on households. The RBA has kept interest rates steady, and any rate cuts will depend on future inflation data.
Credit: Cameron Carr