Australia's inflation rate has fallen to its lowest level in over three years, reaching 2.4% in the year to December 2024. This dip is attributed to factors like government subsidies and easing prices for a range of goods and services, including building materials and food. Economists predict the Reserve Bank will respond with an interest rate cut in February.
Australia’s inflation rate has fallen to its lowest level in more than three years, paving the way for the Reserve Bank to deliver an interest rate cut in February.
The result was due partly to the federal government’s electricity subsidies, but prices for a range of other goods and services also eased. The cost of building new homes actually fell by 0.2 per cent in the quarter, taking the annual rate of growth down to 2.9 per cent. It peaked at almost 21 per cent in mid-2022.
“There’s no question the economy deserves an interest rate cut to ease the restrictiveness of current policy settings. I anticipate the Reserve Bank will welcome these inflation results and reward hard-pressed households and mortgage holders with an interest rate cut at the February 17-18 policy meeting,” he said.
She said non-discretionary inflation – price rises of necessities – fell to 1.8 per cent, while for discretionary goods it was 3.2 per cent. “Non-discretionary inflation was lower than discretionary inflation for the first time in nearly four years,” said Marquardt.The fall in global oil prices continues to ease the pressure on motorists, with petrol prices now 7.9 per cent lower than a year ago.
INFLATION INTEREST RATES RESERVE BANK AUSTRALIA ECONOMY
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