Inflation remained unchanged at 3.4 per cent in the 12 months to February, however, experts believe rate cuts are still coming.
According to the Australian Bureau of Statistics (ABS), the Consumer Price Index (CPI) held steady for a third straight month, with inflation at the lowest level since November 2021.
The most significant price rises were housing (4.6 per cent), food and non-alcoholic beverages (3.6 per cent), alcohol and tobacco (6.1 per cent) and insurance and financial services (8.4 per cent).
Rents increased 7.6 per cent in the 12 months to February, up from 7.4 per cent in the year to January and are currently the major driving force behind high inflation, led by surging population numbers.
The ABS noted that the rise in annual rents “reflect strong demand for rental properties and tight rental markets”, despite the increase in subsidies from the Commonwealth Rental Assistance Scheme (CRAS) in September 2023.
Real Estate Institute of Australia (REIA) President, Leanne Pilkington, said inflation was headed in the right direction.
“Whilst the February figure is unchanged, we need to remember, as the treasurer reminded us earlier this week, that the monthly figures bounce about and are less reliable than the quarterly data,” Ms Pilkington said.
“The downward trend in inflation is undeniable, with monthly figures not having increased since the peak of 8.4 per cent in December 2022.”
Ms Pilkington said it appeared the RBA would have a case for lower interest rates sooner rather than later.
“The latest CPI provides an important piece in that jigsaw,” she said.
“The 13 rate hikes by the RBA since May 2022 are not only stemming the inflation tide but also slowing the economy.
“As the pieces of RBA’s jigsaw fall into place the expectation is that the RBA will provide home buyers some interest rate relief later this year.”
Canstar’s Group Executive Financial Services, Steve Mickenbecker, said the fact inflation had not fallen in three months would be a concern to the RBA.
“This will worry the Reserve Bank that the creep towards the 2 to 3 per cent target band has stalled,” Mr Mickenbecker said.
“The Reserve Bank won’t be taking the hand off the interest rate rise lever just yet but would need to see another couple of disappointing months of data to warrant a rate increase.”
He said the RBA would like to see faster progress in its struggle against inflation and at the current pace, the first cut to the cash rate was probably seven months away, in November.
“A tanking of the economy could bring cuts forward but no one wants to wish for that,” he said.
