Slowly but surely, inflation moves in the right direction
It’s proven stubbornly sticky to shift but latest figures show inflation is on its way down
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It’s a happy new year for mortgage holders following the release of data on the Consumer Price Index today. The CPI rose to 4.3 percent in the 12 months to November last year, down from 4.9 percent in October, taking pressure off the RBA for another rate rise.
“This month’s annual increase of 4.3 per cent is down from the 4.9 per cent rise in October and is the smallest annual increase since January 2022,” said Michelle Marquardt, ABS head of prices statistics.
The results make a further rise in the cash rate unlikely when the RBA Board meets in February, the first meeting of the year. December inflation is expected to follow a similar pathway, further reducing the chances of another interest rate hike.
Once again, housing, insurance and food and beverages placed the strongest pressure on prices, although there are signs that services inflation, which has remained stubbornly high, is finally starting to dip, down from 5 percent in October to 4.7 percent.
It’s welcome news for mortgage holders who shouldered significant rate rises over the past 18 months as the official interest rate rose to 4.35 percent. Some experts are so optimistic about the news that they have predicted the possibility of cuts as early as May. However, the country’s largest mortgage lender, the Commonwealth Bank, anticipates September 2024 as the most likely time for the first fall in rates.
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CommSec research reveals this state is leading the country in economic growth, unemployment, construction and dwelling starts
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South Australia is currently the strongest state or territory economy in the country, with economic activity 9.1 percent above its decade-average in the December quarter, according to CommSec research. NSW was second with economic output running 8.6 percent above its long-run average, followed by Victoria with 8.5 percent, the ACT at 8.3 percent and Western Australia at 6 percent.
Economic activity in both Queensland and Tasmania was 4.5 percent above average while the Northern Territory underperformed its long-term average by 0.5 percent.
The CommSec research ranks states and territories on several key economic metrics and compares the latest quarterly data with each area’s decade average. South Australia ranks first on four of the eight key indicators. They are economic growth, unemployment, construction and dwelling starts.
Western Australia ranks first on population growth and business and equipment investment. Population growth has been a key element in Perth and regional Western Australia becomingthe country’s hottest property markets over the past 12 months. CoreLogic figures released this week show home values are up 21.1 percent in Perth and 13.3 percent in the state’s regions.
Despite high inflation, retail spending remained above the long-term average in all states and territories in the December quarter. The ACT led with retail expenditure 12.2 percent higher than its long-term average, followed by Western Australia with 11.3 percent, Victoria at 11.2percent and Queensland at 11.1 percent.
Queensland is in the top spot for new home loans. Propelling this is very strong internal migration and a doubling of the First Home Owners Grant to $30,000 from 20 November last year. New home loans issued to first home buyers in November surged to a 15-month high, according to data from the Australian Bureau of Statistics. Queensland is currently the second strongest housing market, with home values up 16.1 percent in Brisbane and 11.2 percent in regional areas over the past year.
In all states and territories except the Northern Territory, housing finance commitments remained above decade averages in the December quarter. The value of home loans in Queensland was 21.1 percent higher than the state’s long-term average. The next strongest was Western Australia, up 17.5 percent, South Australia, up 14.2 percent, and the ACT, up 12 percent. The new CoreLogic data reveals 15 consecutive months of growth in the national median price, despite high interest rates.
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