Inflation data sparks hope for interest rate cuts as rental growth slows
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The Consumer Price Index rose 0.9 per cent in the March quarter and 2.4 per cent annually, strengthening the case for interest rate cuts that could benefit homebuyers and renters.
Australian Bureau of Statistics data shows inflation remaining steady at 2.4 per cent in the twelve months to March 2025, unchanged from the December 2024 figure.
The stabilising inflation rate falls within the Reserve Bank of Australia’s target range for the third consecutive quarter, potentially signalling an easing monetary policy.
“The annual movement for the monthly CPI excluding the volatile items of fruit and vegetables, automotive fuel and holiday travel and accommodation, rose 2.6 per cent in the March quarter, down from the December quarter figure of 2.7 per cent and the lowest since March 2022,” said Real Estate Institute of Australia President, Leanne Pilkington.
Core inflation measures also showed improvement, with the trimmed mean inflation declining to 2.9 per cent from 3.3 per cent in the previous quarter.
“We now have all the broad measures of inflation in the RBA’s target range and the third consecutive quarter that the headline rate has been in the range,” Pilkington said.
Services inflation, which has been resistant to monetary policy measures, eased to 3.7 per cent in the March quarter, down from 4.3 per cent in December.
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Housing costs increased by 1.7 per cent during the quarter, while food and non-alcoholic beverages rose 1.2 per cent.
Rental price growth continued to moderate, with rents rising 5.5 per cent over the 12 months to March, down from 6.4 per cent in the December quarter.
This marks the fourth consecutive quarter of slowing rental growth and represents the lowest annual increase since March 2023.
The inflation figures align with market expectations for an interest rate cut when the RBA meets in May, with additional reductions anticipated throughout 2025.
“This will provide additional relief for borrowers following the cut in February and improve affordability,” Pilkington said.
The REIA president noted that election commitments from major parties to improve home ownership accessibility for first home buyers contributed to a more positive outlook for prospective purchasers.
However, Pilkington warned that proposals from the Greens and some independents to modify negative gearing and capital gains tax arrangements could reverse the current easing trend in rental increases.