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Inflation proves stubborn as CPI remains above target in April, REIA reports

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The Consumer Price Index (CPI) rose 3.6 per cent in the 12 months to April, following a 3.5 per cent rise in the twelve months to March and 3.4 per cent in the twelve months to February, according to the latest data from the Australian Bureau of Statistics (ABS).

Real Estate Institute of Australia (REIA) President, Ms Leanne Pilkington, noted that the annual movement for the monthly CPI, excluding volatile items such as fruit and vegetables, automotive fuel, and holiday travel and accommodation, rose 4.1 per cent in April, the same as for March and up on February’s figure of 3.9 per cent.

“For the last four months the figure has been, on average, at just over 4 per cent. This stickiness is the same as other countries are experiencing in getting inflation into the target range of their central banks. Showing that the final hurdles are difficult,” Ms Pilkington said.

The most significant price rises were in housing (up 4.9 per cent), food and non-alcoholic beverages (up 3.8 per cent), alcohol and tobacco (up 6.5 per cent), and transport (up 4.2 per cent).

Rental prices, supported by the Commonwealth Rent Assistance (CRA), showed a modest abatement in the rate of increase. Rents increased 7.5 per cent in the 12 months to April, down from 7.7 per cent in March and 7.6 per cent in February. In monthly terms, rental prices rose 0.5 per cent in April, down from a 0.6 per cent rise in March.

“These changes reflect the increase in CRA in mid-March 2024, which has the effect of reducing rents for eligible tenants. The April CPI will also reflect this change in assistance,” Ms Pilkington explained.

The REIA emphasised the importance of CRA in keeping a lid on rent increases for eligible tenants and reiterated their advocacy to increase the payment to levels seen twenty years ago.

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Despite the disappointing CPI figure, Ms Pilkington noted that it comes on the back of other economic data, including retail figures this week showing one of the weakest markets for generations.

“The Budget forecast of inflation down to 2.5 per cent by the end of the year appears optimistic but the current uptick in inflation should not flag an increase in interest rates merely a delay in a drop,” Ms Pilkington concluded.

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