Consumer price index continues downward trend, sparks hope for interest rate cut

The Consumer Price Index (CPI) rose 3.5 per cent in the year to July, down from 3.8 per cent in June and 4.0 per cent in May, according to the latest data from the Australian Bureau of Statistics.

Real Estate Institute of Australia (REIA) President, Leanne Pilkington, noted that the annual movement for the monthly CPI, excluding volatile items, showed a significant decrease.

“The annual movement for the monthly CPI excluding the volatile items of fruit and vegetables, automotive fuel and holiday travel and accommodation, rose 3.7 per cent in July, down from the June figure of 4.0 per cent which was the same as for May. This is the lowest since June 2022,” Ms Pilkington said.

The annual trimmed mean, an important analytical series, also confirmed the downward trend, rising by 3.8 per cent in July compared to 4.1 per cent in June and 4.4 per cent in May.

Ms Pilkington expressed optimism about the future trajectory of inflation, citing upcoming cost of living measures.

“With the cost of living measures of the Federal and State governments’ to take effect in the remaining months of this year, we can reasonably expect the headline inflation numbers to continue the downward trend for the remainder of the year,” she said.

Despite the Reserve Bank of Australia Governor’s suggestion that interest rate cuts are unlikely this year, Ms Pilkington believes the current CPI trend offers hope for borrowers.

“Despite the ‘forward guidance’ of the Governor of the RBA suggesting that interest rate cuts are not likely this year, the current trajectory of the CPI gives hope for borrowers that a cut cannot be far away,” Ms Pilkington said.

The REIA, established in 1924, represents 85% of Australian real estate agencies and advocates for the industry, which comprises 46,793 businesses employing 133,360 Australians.