Inflation falls to 2.75 pa
Inflation figures for August 2024 have fallen from 3.5% to 2.7% pa. The new figures released by the ABS is lowest for the past three years ago and inflation is now back in the RBA target range of 2 to 3%.
As we posted last month, while underlying inflation falls is it all smoke and mirrors? What If We Finance believes this is because while energy prices have fallen, prices for other goods and services are rising sharply. As such, it is unlikely, we will have any interest rate cuts until 2025.
Having said that economic data is changing, weekly and anything is possible.
In positive news for consumers petrol prices have fallen 7.6% over the past 12 months and this may help partly ease cost of living pressures.
The RBA believes inflation will jump back to 3.7% per annum next year when the electricity bill rebates driven by federal and state government spending expire. The RBA said we need to see you consistent downward, inflationary, trend, and inflation to consistently remain in at 2 to 3% pa range with no peaks and troughs.
What If We Finance CEO spiro Kolokithas believes we are in a period economic uncertainty with conflicting data and conflicting views, and anything is possible. While electricity bills have fallen by approximately 17.9% for the year to August 2024, rapid rises in the prices of other goods and service, combined with the temporary energy rebate may be masking the underlying economic trend.
What next for home loans?
The next interest rate move is likely to be downwards which is positive news for consumers but the rate reduction may be months away. You should work with your home loan broker or mortgage broker to review your finances, and this should include the market scan a home loan health check to make sure you’re home loan meets your needs.
