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The Real Estate Institute of Australia (REIA) has said that the country’s effort to tame inflation is still on track, despite a recent rise in the Consumer Price Index (CPI).
With the latest figures showing that the CPI rose 1 per cent in the March 2024 quarter and 3.6 per cent over 12 months, concern was immediately raised that this represented a reversal in recent hopes that the nation was winning the battle against inflation.
But the REIA has called the fluctuation a “blip” in the overall trend, and pointed to data contained within the latest release that paint a more bullish picture.
“While the quarterly increase was up from the December quarter, it is the fifth consecutive quarter of lower annual inflation since the peak of 7.8 per cent in the December 2022 quarter. Australia appears to be experiencing the same final hurdles as the USA in getting inflation back into the target range,” REIA president Leanne Pilkington commented.
“The important analytical series of trimmed mean, which excludes large price rises and falls, was 4 per cent for the year compared to 4.2 per cent in the December quarter. This is the fifth consecutive decrease in the weighted mean analytical series,” she added.
Delving further into the quarterly report, Pilkington noted that “the figure on services inflation, which has been sticky and has been of concern to the RBA, was also encouraging. It eased for the third consecutive quarter, to 4.3 per cent down from the December figure of 4.6 per cent and the peak of 6.3 per cent in the June 2023 quarter”.
The REIA did acknowledge, however, that housing supply shortages are continuing to complicate the picture.
“The most significant quarterly price rises were rents, up 2.1 per cent, secondary education, up 6.1 per cent, tertiary education, up 6.5 per cent, and medical and hospital services, up 2.3 per cent.
“Rents rose 7.8 per cent annually, higher than the 7.3 per cent annual rise in the December 2023 quarter and the highest since March 2009.
“The highest increase in rents in 15 years highlights the need to address supply and the need to keep private investors adding to that supply by not tinkering with current taxation arrangements,” Pilkington said.
While mortgage holders in particular are hoping to see inflation continue its downward trajectory, Pilkington urged patience and for home owners to focus on the bigger picture.
“The CPI data comes on the back of other economic data including an increase in unemployment figures indicating a slowing economy. The slight increase in the quarterly figure is a blip in the final steps to control inflation. Just as in the USA, it doesn’t mean that interest rates won’t be decreasing but that a little more patience is required,” she stated.
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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