Pulse to be taken on inflation, retail and home prices - triSearch

Pulse to be taken on inflation, retail and home prices

By: Poppy Johnston

A key monthly inflation indicator is expected to inch a little higher but such a result is unlikely to worry the Reserve Bank as it ponders interest rates.

Australia’s inflationary pulse will be taken this week, with check-ups on spending activity, the property market and business investment also on the calendar.

The economic health assessments will start on Wednesday with the monthly consumer price index for January.

While missing some of the price moves captured in the full quarterly version, the Australian Bureau of Statistics’ monthly index will still be scanned for evidence of easing price pressures ahead of the Reserve Bank’s interest rate meeting in March.

Consumer price growth has been easing more quickly than the RBA anticipated, although the central bank still expects it to take until 2025 to be back within its target range of two to three percent.

In the 12 months to December, the consumer price index rose 3.4 percent, well down from the 4.3 percent growth through to November.

Commonwealth Bank expects the monthly indicator to tick higher to 3.5 percent growth in the 12 months to January, with a spike in international holiday travel and accommodation inflation last summer influencing the annual rate.

Stephen Wu, an economist at the bank, expects housing to remain the key driver of inflation in the month.

“Record low vacancy rates are keeping rent inflation elevated, with the impact from the increase in rental assistance having fully faded since November last year,” he said.

Labour shortages are also keeping construction costs high.

Retail sales data, available today (Thursday, February 29) will shed some light on the all-important consumer sector, which has been battered by a series of interest rate rises and rising living costs.

The RBA has been monitoring consumers closely as a source of uncertainty for its plan to bring inflation back to its target range while keeping the economy growing.

Tomorrow (Friday, March 1), private real estate data firm CoreLogic will release its home value index for February.

Housing prices grew steadily in 2023, although the pace of increase has slackened in recent months.

The federal government’s tax amendments, which would give a bigger cut to people earning less than $150,000 and a smaller cut to those earning more, will be introduced to the Senate this week after passing the lower house earlier in February.

On the stock market, the benchmark S&P/ASX200 index on Friday finished up 32.4 points, or 0.43 percent, to 7643.6, while the broader All Ordinaries added 33.9 points, or 0.43 percent, to 7899.2.

For the week the ASX200 finished down 0.2 percent, basically reversing its gains from the week before, as a global AI-fuelled rally in equities bypassed Australian shores.

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