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The Real Estate Institute of Australia has noted that easing inflation and month-on-month rent decreases could lead to more rate cuts in 2025.
Recent Australian Bureau of Statistics (ABS) data revealed that the monthly consumer price index (CPI) rose 2.5 per cent in the 12 months ending January 2025.
The ABS’ findings showed that annual CPI inflation of 2.5 per cent in January 2025 registered at the same level as the 2.5 per cent recorded in December 2024.
To assess inflation trends, Real Estate Institute of Australia (REIA) president Leanne Pilkington calculated the annual movement for monthly CPI by excluding volatile items such as fruit and vegetables, automotive fuel, holiday travel and accommodation.
Following the calculation, she reported that annual movement for the monthly CPI rose 2.9 per cent in January 2025, up from the December 2024 figure of 2.7 per cent and 2.8 per cent for November.
“The important analytical series of annual trimmed mean inflation went up by 2.8 per cent in January, up from 2.7 per cent in December and down from 3.2 per cent in November,” Pilkington added.
While these figures align with market expectations and trends towards the RBA’s target range, Pilkington noted that this forecast is limited to the ABS’ most recent figures.
“As the monthly CPI indicator is not as comprehensive as the ABS’ quarterly inflation data as it only updates prices for around two-thirds of the consumer price index basket, some volatility around the trend line can be expected,” Pilkington said.
Pilkington said rents increased by 5.8 per cent in the 12 months to January, down from a 6.2 per cent rise and marking the lowest 12-month increase since April 2023, which she linked to the increased vacancy rates across most capital cities.
“The consistent downward trend in the figures support market expectations of further rate cuts during 2025 which would provide additional relief for borrowers following the cut this month,” she added.
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