The subdued inflation result earlier this week should be reason enough for the Reserve Bank of Australia (RBA) to cut the official cash rate next month, the Real Estate Institute of Australia has claimed.
“The latest figures are well within the RBA’s target zone of two-three per cent and should provide a clear message to the RBA to reduce official interest rates at its February meeting,” REIA president Pamela Bennett said.
The “all groups” CPI rose 3.1 per cent through the year to the December quarter 2011, compared with a rise of 3.5 per cent through the year to the September quarter 2011, the Australian Bureau of Statistics said.
“The housing group showed a slowing down in the quarterly rate - from 1.9 per cent in the September quarter 2011 to 0.4 per cent in December quarter 2011– the annual rate decreased from 4.2 per cent for the 12 months to September 2011 and to 4.0 per cent for the 12 months to December 2011,” said Ms Bennett.
“The main contributor to the December quarter increase for the housing group was rents which increased 1.0 per cent."
Rents look likely to rise in most Australian capitals in the next 12 months, particularly in Perth, Sydney and Canberra, according to recent figures from Australian Property Monitors (APM).
“For the year to December 2011 the biggest increases in the housing group were for electricity (12.2 per cent), water and sewerage (8.6 per cent) and gas and other household fuels (6.7 per cent) with inflation within the RBA’s target zone and given the latest outlook for the Australian and global economies, it is appropriate to have a third consecutive cut in interest rates,” Ms Bennett added.