Housing component of CPI up 1.7 percent, RBA has scope to cut rates: CoreLogic RP Data Property Pulse

The housing component of the Consumer Price Index, increased 1.7 percent over the 12 months to March 2016, the lowest annual increase since December 1998 according to the latest Property Pulse by CoreLogic RP Data.

Housing is the largest component of overall CPI however only counts owner occupier purchases of new dwellings.

Following the ABS releasing consumer price index (CPI) data for the March 2016 quarter earlier this week, inflation was recorded at -0.2 percent over the March 2016 quarter - the largest quarterly fall in inflation since December 2008 according to the report.

"Over the past year, inflation was recorded at 1.3 percent, its lowest annual reading in 12 months and well below the Reserve Bank’s (RBA) target range of 2 percent to 3 percent per annum," the report said.

"The inflation reading was dragged lower by large drops in the price of automotive fuel (-10 percent) and fruit prices (- 11.1 percent). The RBA likes to look at measures of underlying inflation, the trimmed mean and weighted median, which over the quar ter were recorded at 0.2 percent and 0.1 percent respectively.

"Over the past 12 months, the trimmed mean increased by 1.7 percent and the weighted median rose 1.4 percent. The annual change in the trimmed mean is at its lowest level since March 1999 and the annual change in the weighted median is at its lowest level on record (since March 1983). The very low inflation reading means that the RBA now has more than enough scope to cut official interest rates if required."