Evidence suggests interest rates should stay on pause: REIA

Apr 26, 2023, 15:55 PM

ABS data shows that the Consumer Price Index (CPI) rose 1.4 per cent in the March 2023 quarter and 7.0 per cent over the past twelve months.

Title : Evidence suggests interest rates should stay on pause: REIA

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News date : Apr 26, 2023, 15:48 PM

ABS data shows that the Consumer Price Index (CPI) rose 1.4 per cent in the March 2023 quarter and 7.0 per cent over the past twelve months.

“This is down on the annual figure for the December quarter of 7.8 per cent and is the lowest quarterly increase since the December 2021 quarter and clearly confirms a slowing down in the rate of increase,” REIA President, Hayden Groves said.

“The most significant price rises were medical and hospital services, up 4.2 per cent, tertiary education, up 9.7 per cent, gas and other household fuels, up 14.3 per cent, and domestic holiday travel and accommodation, up 4.7 per cent.

“The rate of price growth for new dwellings has continued to ease this quarter, following a record annual rise in the September 2022 quarter, reflecting improvements in the supply of construction materials and an easing in demand.

“Rents increased by 4.9 per cent annually on a weighted capital city basis, the largest annual rise since 2010, and compares to 4.0 per cent for the twelve months to December. In Sydney and Melbourne the annual increases were 4.8 per cent and 3.1 per cent, respectively. These are the largest annual increases since 2012. Annual growth in rent prices for the remaining capital cities continues to outpace price growth in Sydney and Melbourne.

“The rent measure incorporates a new large dataset of rental properties as outlined in the paper ‘New insights into the rental market’ released early this week. It should be noted that the measure of rents in the CPI includes prices for both the public and private rental market and accounts for rental assistance in the private rental market. This is in contrast to other measures which measure rents in private rental market only and exclude rental assistance. As such the CPI measure of rents will be lower than other measures.

“The important analytical series, trimmed mean annual inflation, which excludes large price rises and falls, was 1.2 per cent for the quarter and 6.6 per cent for the twelve months, down from 6.9 per cent in December which was the highest since the ABS first published the series in 2003.

“With the CPI having peaked late last year, as was forecast by the RBA, it is time for it to continue to keep a pause on further rate rises at its meeting next week allowing additional time to consider additional data showing the lagged impact of the previous ten rate increases and assess the outlook for the economy.”

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