No rate increase: CPI inflation within the RBAs target

REIA Media Release

The September 2010 quarter Consumer Price Index (CPI) for the housing group, increased 2.3 per cent, compared to all groups, which increased 0.7 per cent. These figures increased 5.2 per cent and 2.8 per cent respectively over the twelve month period. The housing group is up from the 0.6 per cent level of the previous quarter.
Contributing to the annual increase of 5.2 per cent for the housing group were substantial increases in the price of utilities – 12.4 per cent for electricity, 12.8 per cent for water and sewerage, 9.8 per cent for gas and other household fuels and 6.2 per cent for property rates and charges.
President of the Real Estate Institute of Australia (REIA), Mr David Airey said, “The CPI inflation rate is well within Reserve Bank’s target zone of 2-3 per cent which should send a very clear message; that rates need not be increased next week.”
The index for house purchase increased 3.2 per cent for the year, with rents increasing 4.3 per cent for the year.
“REIA’s Deposit Power Housing Affordability Report has shown a dramatic worsening in housing affordability, with the average Australian now putting nearly 35 per cent of their income towards loan repayments,” he continued. “Increasing rates next week will only cause greater mortgage stress for home owners and will further flatten demand in the property sector,” he said.
Mr Airey concluded by commenting on today’s comments in the Financial Review that the Australian Bureau of Statistics (ABS) were conducting a review of the CPI indicator saying, “REIA put forward a submission to the ABS on this matter supporting the RBAs recommendation that CPI should be released on a monthly basis. Given the importance of the CPI in the monetary policy decision-making process, a monthly CPI would improve the forecast of inflation, would provide a better input to identifying the trend of inflation and detecting turning points,” concluded Mr Airey.
The Real Estate Institute of Australia (REIA) is the national professional association for the real estate sector in Australia.
For further information or interview opportunities, please contact:
David Airey REIA President 0418 906 002
Neil Fisher REIA CEOnon McClelland Manage0412 637 550
Rhiannon McClelland REIA Manager Communicationsn 0421 422 919

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