"It is time for the RBA to stop further increases," says peak body head
The Reserve Bank may have acted rashly when raising interest rates last month, according to the Real Estate Institute of Australia.
According to the latest data from the Australian Bureau of Statistics, the Consumer Price Index (CPI) experienced a 4.9% rise in the 12-month period leading up to October. This figure marks a decrease from the 5.6% recorded in September and falls below the peak of 8.4% observed in December 2022.
“The latest figure continues the downward trajectory in the CPI and is below market expectations of 5.2%, suggesting the RBA may have been hasty in raising interest rates at its November meeting,” said REIA president Hayden Groves.
Further analysis of the data reveals that the annual movement for the monthly CPI, excluding volatile items such as fruit and vegetables, automotive fuel, and holiday travel and accommodation, increased by 5.1% in October, down from 5.5% in September.
Housing, food and non-alcoholic beverages, and transport were identified as the most significant contributors to the annual increase in the October monthly CPI indicator. Housing experienced a 6.1% increase, while food and non-alcoholic beverages rose by 5.3%, and transport saw a 5.9% increase.
Read next: REIA reports on the state of Australia’s housing market
“Whilst still higher than we would like, the annual increase for housing was lower than the 7.2% increase in September,” Groves said. “Similarly, rents – whilst rising by 6.6% in the 12 months to October – were lower than the rise of 7.6% in September.”
This decline can be attributed to the implementation of increased Commonwealth Rent Assistance, effective from Sept. 20, an initiative that the REIA has advocated for to support eligible tenants.
The latest CPI figures follow weaker-than-expected retail sales in October, with a 0.2% decrease in retail turnover. In per capita terms, this represents a 1.6% reduction compared to the previous year, marking the largest decline outside the COVID-19 pandemic period, REIA reported.
“The lagged response to the successive interest rate hikes is showing up in the data, and with the CPI having peaked late last year and trending down, it is time for the RBA to stop further increases on interest rates,” Groves said.
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