- Headline inflation falls to 2.4 per cent – best since early 2021
Australian home borrowers can now expect a rate cut soon with inflation now at the lowest level in almost four years.
Headline inflation fell to 2.4 per cent in the December quarter – marking the best consumer price index data since early 2021.
Underlying inflation, also known as the trimmed mean, eased to 3.2 per cent during the same period, putting it only marginally above the Reserve Bank’s 2 to 3 per cent target.
The Reserve Bank focuses on this underlying, annual number that strips out volatile items like petrol and fruit, instead of the CPI which includes one-off factors like the federal government’s $300 electricity rebates.
The better-than-expected figures from the Australian Bureau of Statistics, released on Wednesday, could see the RBA cut interest rates as early as February, ahead of the next election due by May.
Cheaper petrol at the end of last year saw transport costs fall by 1.5 per cent in 2024.
But school fees are now the biggest drain on family budgets with education costs climbing by 6.5 per cent.
The official data was taken before the Australian dollar in January sunk to 61 cents for the first time since March 2020 during the start of Covid.
Australian home borrowers can now expect a rate cut soon with inflation falling (pictured are shoppers at Sydney’s Pitt Street Mall)
A weaker currency makes imports more expensive, which could delay a potential interest rate cut.
But the latest data was better than economists had been forecasting.
This means the Reserve Bank could potentially cut the cash rate from an existing 4.35 per cent level when it meets again on February 17 and 18.
