The Consumer Price Index (CPI) rose 0.4% in the March quarter of 2018, according to the latest figures from the Australian Bureau of Statistics (ABS). This follows a marginal rise of 0.6% in the December quarter of 2017.
“The CPI rose 1.9 per cent through the year to the March quarter 2018, having increased 1.9 per cent through the year to the December quarter 2017,” the ABS said.
"While the annual CPI rose 1.9 per cent, most East Coast cities have continued to experience annual inflation above 2.0 per cent, due in part to the strength in prices related to Housing and Food,” said Bruce Hockman, chief economist for the ABS. “Softer economic conditions in Darwin and Perth have resulted in annual inflation remaining subdued at 1.1 and 0.9 per cent respectively.”
The latest CPI figures spell good news for homebuyers and renters, as it suggests the historically low interest rates are set to continue, according to the Real Estate Institute of Australia (REIA).
“The annual changes for the analytical series of trimmed mean and for the weighted median were 1.9 per cent. The annual changes in the two analytical series have been below the RBA’s target zone of 2-3 per cent for the past nine quarters and suggest the continuation of historically low interest rates for some time yet,” said Malcolm Gunning, president of REIA.
“The Housing Group increased by 0.7 per cent for the quarter and 3.3 per cent for the year to March 2018. The major increases in the Housing Group for the year were electricity (up 11.7 per cent) and gas and other household fuels (up 10.0 per cent).”
Rents increased by just 0.2% for the December quarter and 0.8% for the year.
“From 2013, when investment in housing started to pick up, we have seen the rate of increase in rents slowdown in Australia. For the last nine quarters the average annual change has been less than 1.0 per cent,” Gunning said.
“The latest CPI figures show that the increased investment in housing has kept growth in rents lower than they have been historically and is clear testament that the current taxation arrangements benefit renters and that any change would see an increase in rents.
“With the RBA meeting next week, (Tuesday 1 May, 2018) the latest inflation data together with a cooling in the housing market eliminating that source of concern, would suggest that home buyers can be comfortable in the knowledge that interest rates will remain stable for 2018.”
