Yesterday's ABS inflation figures should not necessitate a rate rise, the REIA has claimed.
The Australian Bureau of Statistics has indicated the CPI rose 1.6% in the March quarter, compared to 0.4% in the December 2010 quarter. The result represents the largest quarterly rise since June 2006, and puts the CPI for the year to March at 3.3% compared to 2.7% for the year to December 2010. However, REIA president David Airey has dismissed any need for a rate rise, saying the inflationary measures preferred by the RBA show inflation within the central bank's comfort zone.
“The Reserve Bank of Australia consumer prices measures of weighted median and trimmed median are 2.2% and 2.3% respectively for the year – well within their target zone of 2-3%. Despite the March quarter CPI being the highest since the June quarter 2006, inflation is under control, with a slow-down in the annual rate of increase on the two RBA measures over the last year,” Airey said.
Contributing to the March quarter CPI result, Airey commented, were double-digit increases for fruit and vegetables following flooding and cyclones in many of Australia's agricultural regions. With the Reserve Bank previously pledging to look through any temporary inflationary impacts of the natural disasters, Airey said the RBA should remain on the sidelines when it meets next week.
“The message for the RBA is clear; rates do not need to be increased next week. Increasing rates will only cause greater mortgage stress for home owners and discourage buyers,” he claimed.
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