Inflation slow down leaves ample room for rate cut

Inflation has stepped on the breaks, leaving plenty of room for the RBA to cut the cash rate at its August meeting, according to the REIA



The RBA’s consumer price measures of inflation are within their target zone and continue to slow down, according to the June quarter Consumer Price Index – which the REIA says should be incentive for another rate cut.

“In the June quarter, the consumer price index rose by 0.4% and annual inflation rate is now 2.4%. These figures are well within the RBA’s target zone of 2-3% and should provide a clear message to the board to further ease its monetary policy,” says REIA president, Peter Bushby.

The analytical series of trimmed mean and weighted median increased by 0.5% and 0.7% respectively for the June quarter 2013, compared to increases of 0.3% and 0.5% respectively in the March 2013 quarter.

“The annual changes for the trimmed mean and for the weighted median were 2.2% and 2.6% respectively and are identical to the changes for the twelve months to the March quarter 2013,” says Bushby.

The housing group increased by 0.6% for the June quarter compared to 1.2% in the March 2013 quarter - the annual rate of increase was 5.3%.

The main increases in the June quarter for the housing group were rents and gas and other household fuels which increased by 1.1% and 1.0% respectively. For the year to June 2013, the largest increases in the housing group were for electricity (17.2%) and gas and other household fuels (15.3%). Rents increased by 3.4% for the year.

“Previously, the RBA indicated that the inflation outlook could provide scope for further easing if it was needed to support demand. With inflation well under control and a subdued economy, it’s appropriate we see a further cut in interest rates when the RBA Board meets in August.”

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