Bernie Lewis Home Loans have been nervously awaiting the Quarterly Inflation Report from the Australian Bureau of Statistics, and it dropped on Wednesday the 26th of July with some welcome data. Inflation has fallen below expectations giving much-needed relief to those anticipating a rate rise next week.
Annual inflation was recorded at 6.0%, below the RBA’s estimate of 6.3%, indicating that inflation is decreasing at a faster pace than expected. The fall in annual inflation from 7.8% to 6.0% is the fastest 6 month decrease since 2009, excluding the pandemic lockdowns of course. CPI only increased by 0.8%, which is another important metric to relate to interest rate volatility. This should provide the RBA with enough evidence to support holding the Cash Rate at 4.10%.
The main contributors to inflation during the this quarter were rents and international travel. A simplistic view would be to align increasing rents to lack of supply and increased interest expenses for landlords, both of which are caused by a restrictive interest rate market.
Whilst this won’t lead to interest rates dropping anytime soon, it does indicate that we should have faced the worst of interest rates here in Australia and there should be a more positive outlook from here on in. With Dr. Philip Lowe soon winding up his tenure as Governor of the RBA on the 17th of September, hopefully the change in guard will present a better market for Australian home loan customers and those seeking to buy their first home.