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The Real Estate Institute of Australia has forecast that a rate cut is not far off based on the latest CPI data.
The Australian Bureau of Statistics (ABS) has reported that the consumer price index (CPI) rose 0.2 per cent in the September 2024 quarter and 2.8 per cent over 12 months. It marks a substantial drop from the numbers out of the June quarter, when inflation came in at 3.8 per cent for the 12-month period.
Significantly, this now puts the annual inflation figures within the RBA’s target band of 2 per cent to 3 per cent, which the central bank’s board has long cited as a necessary benchmark to reach before it could consider a rate cut.
Welcoming the news, the REIA said that the latest figures should be cause for optimism among borrowers.
“Borrowers may anticipate that a rate cut cannot be far away,” said REIA president, Leanne Pilkington.
She noted that there were also positive movements in the trimmed mean, which excludes large price rises and falls, with that figure falling to 3.5 per cent in the September quarter, from 4 per cent in June.
“This is the seventh quarter in a row of lower annual trimmed mean inflation, down from the peak of 6.8 per cent in the December 2022 quarter. Similarly, the weighted median rose 0.9 per cent in the September 2024 quarter and over the past 12 months, the weighted median rose 3.8 per cent,” Pilkington commented.
“With all three broad measures of inflation at the lowest they have been since 2021 and the headline rate within the RBA’s target band and the global direction of inflation and interest rates, borrowers can reasonably expect that the RBA’s next move will be down and not up as feared,” she said.
Over the quarter, the most significant quarterly price rises occurred among the categories of recreation/culture and alcohol/tobacco, which were both up by 1.3 per cent. Food and non-alcoholic beverages rose 0.6 per cent.
Rents rose 1.6 per cent for the quarter and 6.7 per cent annually, down from the annual increase of 7.3 per cent in the June quarter.
Pilkington noted that further data releases due out shortly will provide more clarity on the RBA’s next cash rate call.
“This week ABS will also release data on September retail trade and household spending. This will provide further pointers on consumer behaviour before next week’s RBA board meeting, and assessed with RBA’s twin objectives of not only taming inflation but also achieving full employment,” Pilkington said.
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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