The latest Consumer Price Index (CPI) figures are in, and there’s some promising news for Australia’s economy: inflation has returned to the Reserve Bank of Australia’s (RBA) target range of 2-3% for the first time since early 2021. The Australian Bureau of Statistics (ABS) has revealed that inflation for the September 2024 quarter rose by just 0.2%, marking a drop in the annual rate from 3.8% in June to 2.8%. Here’s a look at what’s driving these changes and why it’s significant for borrowers and homeowners.
CPI Figures in September 2024: A Shift Toward Stability
The recent CPI data shows that inflation is slowing, bringing it back into the RBA’s target range. This outcome reflects the impact of the RBA’s monetary policies, which began in May 2022 and aimed to moderate inflation within a manageable range. The quarter’s modest CPI rise of 0.2% marks the lowest increase since June 2020.
Key Contributors to Inflation: What’s Driving These Changes?
While inflation is slowing, not all sectors have felt the same impact. Here’s a breakdown of where prices rose and where they fell:
- Sectors with Price Increases: Recreation and culture saw a 1.3% rise, while food and non-alcoholic beverages went up by 0.6%, reflecting the continued demand in these areas.
- Sectors with Price Drops: Significant reductions were seen in electricity prices, which fell by 17.3%, largely due to rebates from the 2024-25 Commonwealth Energy Bill Relief Fund and additional state-level support in regions like Queensland, WA, and Tasmania. Without these rebates, electricity prices would have seen a modest increase of 0.7%. Fuel prices also declined by 6.7%, driven by decreased global oil demand, pushing petrol prices to their lowest levels since June 2023.
These shifts highlight the impact of targeted government rebates and lower global energy demand on inflation.
Goods vs. Services Inflation: How Each Is Impacted
- Goods Inflation: Goods inflation remains relatively stable at 1.4%, with increases driven mainly by tobacco and new dwelling prices.
- Services Inflation: Annual services inflation rose to 4.6%, driven by higher costs in rents, insurance, and childcare.
Monthly CPI Snapshot: Steady Declines Indicate a Positive Trend
The monthly CPI indicator shows a steady decline, with September’s figure rising by 2.1%, down from 2.7% in August and 3.5% in July. Key areas like food and non-alcoholic beverages (up 3.3%), alcohol and tobacco (up 6.3%), and housing (up 1.6%) contributed to the monthly increase. This month-over-month decline indicates a potential cooling in inflation, which is encouraging for households and businesses alike.
What Does This Mean for Borrowers?
With inflation within the RBA’s target, we may see a stabilisation in interest rates, which could bring some relief for prospective homebuyers or those looking at home loan refinance. If you’re considering borrowing, now is a prime time to explore your options as interest rates are likely to fall
How What If We Finance Can Help You
Navigating borrowing options can feel overwhelming, but What If We Finance is here to guide you through it. Our mortgage brokers are committed to finding you competitive rates and personalising your loan options to suit your financial goals. Whether you’re looking to buy your first home, refinance, or simply explore your options, reach out today. We’re here to make your borrowing journey simpler, more affordable, and stress-free.
Get in touch with us and let’s work together to turn your financial aspirations into reality!
