Consumer Price Index rises 3.8% annually, in line with RBA expectations

The Consumer Price Index (CPI) rose 1.0% in the June 2024 quarter and 3.8% over the past 12 months, according to data released by the Australian Bureau of Statistics.

Real Estate Institute of Australia (REIA) President Leanne Pilkington said the annual figure aligns with the Reserve Bank of Australia’s forecast, despite being higher than the March increase of 3.6%.

“Inflation shot down to 3.6 per cent, sooner than it expected, in March, and is now where the RBA had forecast it to be. It is also lower than recent market expectations,” Pilkington said.

The trimmed mean, an important analytical series excluding large price fluctuations, fell slightly to 3.9% from 4.0% in the March quarter.

Pilkington noted this marks the sixth consecutive quarter of lower annual trimmed mean inflation, down from a peak of 6.8% in December 2022.

Significant quarterly price rises included housing (1.1%), food and non-alcoholic beverages (1.2%), and clothing and footwear (3.1%).

Rents increased by 2.0% for the quarter and 7.3% annually, down from the 7.8% annual increase in March.

Pilkington highlighted the RBA’s dual objectives of controlling inflation and achieving full employment, with the latter showing signs of weakness.

“Unemployment having drifted up since June last year, from 3.5 per cent to 4.1 per cent and the RBA has never lifted interest rates if unemployment has increased by 0.6 percentage points over a 12-month period,” she said.

Given the slowing economy and labour market trends, Pilkington suggested that while borrowers may need to be patient for interest rate cuts, they can be “reasonably sure that the RBA won’t increase rates next week.”