According to the President of the Real Estate Institute of Australia, Hayden Groves the timing of the new monthly data issued by the Australian Bureau of Statistics (ABS) has come at a most critical time in setting monetary policy with momentum in the Australian economy waning, with higher inflation and tighter monetary policy contributing to a slowing in household spending and business investment.
“ABS figures released today show that the All Groups CPI, increased by 7.0 per cent in the year to July and 6.8 per cent for the year to August following June’s yearly figure of 6.8 per cent.
“According to the ABS, the largest contributors, in the 12 months to August, were new dwelling construction, up 20.7 per cent and automotive fuel, up 15.0 per cent. The slight fall in the annual inflation rate from July to August was mainly due to a decrease in prices for automotive fuel.
“Once the volatile items of fruit, vegetables and fuel are excluded the annual rise increased from 5.5 per cent in June, to 6.2 per cent in August.
“Whilst the latest CPI figures foreshadow further increases in the official interest rate by the RBA with the Governor having already indicated that we will see another rise in interest rates next Tuesday, the headwinds to consumer spending are mounting with rising cost of living pressures including increased mortgage payments squeezing real incomes. A continued aggressive policy will do little to curb what is still largely supply-driven inflation. It is time to ease up on the rate of interest rate increases and assess the lagged impact that past increases have had”, said Mr Groves.
Mr Groves said the monthly CPI indicator is a timelier indication of inflation than the quarterly figures and provides an early indication of the September CPI.
