Inflation remains subdued as housing rental markets go bust in Perth and Darwin

Inflation remains subdued as housing rental markets go bust in Perth and Darwin
Inflation remains subdued as housing rental markets go bust in Perth and Darwin

The RBA typically seeks 2 percent to 3 percent as its ideal range, but the latest inflation figures sit well outside.

Headline inflation was up 0.5 percent in the December quarter and 1.5 percent over the year. 

Core CPI up 0.4 percent in the quarter and 1.6 percent over the year.

Blogger Pete Wargent noted Perth rents had plummeted in the rental housing component (lead image).

He noted Hobart had a strong rental market.

Commentator Callum Pickering, managing director & chief economist at CP Economics also noted "that is some rental bust we are seeing in Perth and Darwin."

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Inflation remains subdued as housing rental markets go bust in Perth and Darwin

 

Pickering suggested rents constrained by wage growth across the nation. 

Commbank's Craig James noted inflation has bottomed, "but it certainly doesn’t seem on a sharp acceleration path."

Annual inflation has lifted from 1.0 percent to 1.5 percent over the past six months, but it remains well below the Reserve Bank’s 2-3 percent target band, he advised. 

"But while inflation is not yet a concern for the Reserve Bank, interestingly consumers have other ideas.

"The latest weekly consumer sentiment survey by Roy Morgan and ANZ put inflationary expectations (out two years) at the highest level in 4½ years.

 "No doubt the lift in petrol prices has spooked consumers and caused them to take their eyes off other prices which are either falling or becalmed. 

"It is clear that interest rates will stay low for an extended period.

"The Reserve Bank doesn’t need to cut rates again with inflation trending higher, rather than lower.

"And there are doubts that rate cuts would actually do much in terms of driving the economy higher and lifting inflation," James said. 

He noted the main changes were tobacco prices rose by 7.4 percent, with petrol up 6.7 percent, domestic travel and accommodation up 5.5 percent and home purchase up 0.5 percent.

"The CPI was dragged lower by a 2.6 pe cent fall in international holiday travel and accommodation, 5.1 percent fall in clothing “accessories” and 3.2 percent fall in waters, soft drink and juices." 

 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

Tags: 
Housing Costs Inflation

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