- Inflation fell to just 2.1 per cent in May
Aussie home borrowers could get more relief next month with inflation falling to the lowest level in more than six months.
The consumer price index for May fell to just 2.1 per cent – putting on the lower side of the Reserve Bank’s two to three per cent target.
It’s also the lower monthly indicator of headline inflation since October 2024.
KPMG chief economist Brendan Rynne said a moderation in inflationary pressures could see the Reserve Bank cut interest rates again on July 8, with economic growth still slow.
‘This could provide comfort to the Reserve Bank at its next meeting, knowing that any cut to the cash rate will occur in a stable inflationary environment,’ he said.
The futures market is expecting the RBA cash rate to fall from 3.85 per cent now to 3.1 per cent by the end of 2025, which would imply three more interest rate cuts.
In good news for those planning a winter break, holiday travel and accommodation costs increased by just 0.6 per cent over the year.
Bread and cereal prices rose by just two per cent but fruit and vegetable prices were up 2.8 per cent, as the effects of ex-tropical cyclone Alfred continued to wane.
Aussie home borrowers are set to get more relief with inflation falling to the lowest level in more than six months
Fuel prices fell by 10 per cent over the year, but the Australian Bureau of Statistics data was compiled before Israel and the United States launched airstrikes on Iran.
Most economists are expecting the RBA to wait until August to cut interest rates, following the release of more comprehensive June quarter inflation data due out at the end of July.
Services inflation, however, is still a challenge with education costs rising 5.7 per cent as rents climbed by 4.5 per cent.
Insurance premiums, however, are now growing at a slower pace, rising by 3.1 per cent.
Electricity bills fell by 5.9 per cent over the year, with the federal government’s $75 quarterly rebates extended until the end of 2025.
Without the big price falls, underlying inflation was still low at 2.4 per cent.
