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While inflation isn’t yet under control, a broad view shows it’s moderating, even as April brought less-than-comforting news.
According to the Australian Bureau of Statistics, the Consumer Price Index (CPI) rose 6.8 per cent in the 12 months to April, up from 6.3 per cent in March, and on par with February’s 6.8 per cent.
But the Real Estate Institute of Australia (REIA) is urging calm in the face of what could be construed as a bad sign for Australia’s battle to beat down inflation.
“Whilst on the surface this would appear disappointing, it needs to be seen in the context of the drivers of the increase and other economic data,” said REIA president Hayden Groves, referring to the latest inflation figures.
He further explained: “The annual movement for the monthly CPI excluding the volatile items of fruit and vegetables, automotive fuel, and holiday travel and accommodation, rose 6.5 per cent in April, down from 6.9 per cent in March”.
Moreover, he said that a significant movement in the price of automotive fuel, due to changes in the fuel excise tax, had pushed inflation figures up.
“Automotive fuel prices rose 9.5 per cent in the year to April 2023, but this follows a fall of 8.2 per cent in March and is largely due to the changes to the fuel excise tax introduced at the end of 30 March last year,” he said.
Mr Groves noted that the greatest increases were seen in food and non-alcoholic beverages (7.0 per cent) and transport (7.1 per cent) as well as housing, which was up 8.9 per cent. However, given that housing inflation was sitting between 9.5 per cent to 10.6 per cent over the previous four months, Mr Groves noted that April’s figures actually put housing costs on a downward trajectory.
Though he noted that rents continued to rise with an annual increase of 6.1 per cent in April, up from March’s 5.3 per cent.
Stressing the fact that Australian households are feeling “squeezed” by the 11 interest rate rises since May 2022, Mr Groves said that focus should stay on the big picture.
“Despite the April figure, the CPI peaked late last year, and the RBA needs to keep a pause on further rate rises at its meeting next week allowing additional time to consider additional data showing the lagged impact of the previous 11 rate increases and assess the outlook for the economy,” he opined.
Treasurer Jim Chalmers made similar comments on ABC’s 7:30 in relation to the latest inflation figures, saying that commonly, “the monthly figure jumps around a bit”.
But he acknowledged that while the long-term path shows it is settling into safe territory, inflation will still be “higher than we’d like for longer than we’d like”.
It’s a sentiment he echoed recently when discussing the rate at which rents are rising.
“The fact that rents are rising faster than we’d like is really a key motivation for the biggest increase in Commonwealth Rent Assistance in three decades, which was in the budget,” Mr Chalmers said.
But pushed on the fact that rents are rising at a rate that would almost cancel out the maximum Commonwealth Rent Assistance payment, he acknowledged that the government had to walk a line in the budget between providing financing and reining in inflation.
“We’re helping where we can. We are trying to provide support where we can to take some of the sting out of these high and rising rents.”
He continued: “I think it is self‑evident in lots of ways that the cost‑of‑living pressures are coming from high rents, they’re coming from out‑of‑pocket health costs, and they’re coming from energy costs. That’s why those are the three big priorities for the $14.6 billion cost‑of‑living relief plan that we put in the budget, and which we designed in a way to take some of the edge off these cost‑of‑living pressures without adding to inflation”.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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