Industy body says inflation remains within central bank’s target
While market analysts now expect the Reserve Bank to keep the cash rate steady at next week’s meeting, the Real Estate Institute of Australia (REIA) has renewed its call for a rate cut, saying newly released inflation figures still fall within the central bank’s target range.
“The latest ABS figures show the Consumer Price Index rose 3% in the year to August, up from 2.8% in July – the highest since July 2024,” said Hannah Gill (pictured top), deputy president of REIA. “However, the annual trimmed mean inflation, the RBA’s preferred measure, eased slightly to 2.6%, down from 2.7% a month earlier – comfortably within the RBA’s 2-3% target.”
The Australian Bureau of Statistics identified housing, food and non-alcoholic beverages, and alcohol and tobacco as the main drivers of annual inflation. Rental prices rose 3.7% in the year to August, a decrease from 3.9% in July, representing the slowest annual increase since November 2022. This trend is consistent with steady vacancy rates in most capital cities.
“New dwelling prices rose 0.7% annually, with monthly growth in August accelerating to 0.4% as builders reduced discounts and promotional offers,” Gill said. “This underscores the importance of the government’s productivity reforms, which are essential for tackling the core issues of housing affordability and supply. Currently, the high cost of construction exceeds what prospective home buyers can afford, which these reforms need to address.
Meanwhile, Sally Tindall (pictured right), data insights director at Canstar.com.au, said the latest inflation data “has put a pin in what little hope there was for a September rate cut.”
“Inflation has got the wobbles, and while the RBA gives little weight to this monthly dataset, it’s likely to push the board to hit the pause button for now,” Tindall said. “With the economy picking up pace and unemployment still at a relatively low 4.2 per cent, there’s no urgency to cut.
“The board’s dual mandate is to keep prices in check and Australians in jobs, with the latter gaining prominence in their decision-making. Keeping the cash rate on hold gives the RBA the chance to review one more round of Labour Force data to better understand how the jobs market is holding up.”
Tindall pointed out that a hold next week would not necessarily signal the end of the rate-cutting cycle.
“There’s still a chance the RBA will cut rates in November, if inflation plays ball,” she said. “This, however, is by no means a given.
“A cut in November, if it materialises, would shave another $87 off the monthly repayments of a $600,000 loan. That might not sound like much in isolation, but across what would then be four cuts this year, the savings add up to almost $360 a month.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
