Inflation Hits Four-Year Low

Australia’s rate of inflation growth has hit a four-year low of 3.2%, nudging ever closer to the Reserve Bank of Australia’s (RBA) target rate.

The latest Consumer Price Index figures from the Australian Bureau of Statistics show annual trimmed mean inflation, the RBA’s preferred measure of inflation, rose by 3.2% in the 12 months to December 2024.

The RBA has long wanted to rein in inflation to between 2% and 3% and the closer it gets to that range, the more speculation mounts of a possible interest rate cut early this year.

ABS head of prices statistics, Michelle Marquardt says the increase in inflation was the lowest recorded since June 2020.

The RBA next meets again in February and will deliver an interest rates decision on February 18.

Marquardt says the main contributors to the quarterly rise in inflation were recreation and culture spending and alcohol and tobacco.

“The quarterly growth in recreation and culture was driven by domestic holiday travel and accommodation (+5.7%),” she says.

“Higher prices for airfares and accommodation coincided with higher travel demand during the school holidays.”

Marquardt says new dwelling prices dropped during the quarter (-0.2%) which was the first quarterly fall since June 2021.

She says price growth for new dwellings has slowed in recent months, as project home builders offered incentives and promotional offers to attract new buyers due to weak demand.