The latest inflation figures point to interest rates remaining at their current all-time low for the foreseeable future, say analysts.
The Consumer Price Index rose 0.8 per cent in the final quarter of last year, and overall inflationary pressures remain modest, says HIA senior economist Shane Garrett.
Underlying inflation (the RBA
’s preferred measure of inflation) was up by 0.9 per cent in the December 2013 quarter with the annual rate sitting almost exactly in the middle of the RBA
’s target range.
“Today’s figures add further fuel to the notion that interest rates will remain at all-time lows for a considerable amount of time to come,” said Garrett.
“There is no justification to depart from current settings while inflation is under control and while economic growth continues to be below trend.
REIA president Peter Bushby agreed, adding that the annual changes for the trimmed mean and for the weighted median were 2.6% for both and compare to the changes for the twelve months to the September quarter 2013 of 2.3% and 2.4% respectively.
The housing group increased by 0.5% for the December quarter compared to 2.0% in the September 2013 quarter, making the annual rate of increase 4.3%.
The main increases in the December quarter for the housing group was the purchase of new dwellings which increased by 1.0%. For the year to December 2013, the largest increases in the housing group were for water and sewerage (9.3%), property rates and charges (7.9%) and electricity (6.3%). Rents increased by 3.0% for the year.
Garrett added that it is “encouraging” to see the rate of housing cost a little below its medium term trend rate.
“However, at 4.3 per cent, day-to-day housing costs are growing much faster than the general price level. This shows that more needs to be done by policymakers in making housing more affordable.”