Australia’s inflation rate has fallen to 5.4% for the year to September, down from 6% in June. Inflation continues to be driven by services, with insurance (+14.7%) and rents (+7.6%) continuing to see the biggest price increases across the country.
A rebound in automotive fuel prices (+7.2%) is also supporting higher inflation, as oil prices picked up over the past three months following production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and the outbreak of war in the Middle East.
In Perth, the inflation rate increased to 5.8% for the year to September, up from 4.9% in June. However, this figure is distorted by the electricity subsidies provided by the State Government this time last year – Perth recorded the smallest quarterly increase in prices out of all capital cities, with prices rising only 0.4% since June.
While inflation has continued its downward trajectory, it is not falling as fast as economists had expected or the RBA would like. Given this, along with some of the rhetoric coming from RBA Governor Michele Bullock over the past month, CCIWA is anticipating another increase in the cash rate when the RBA meets next week.
Soft housing approvals weigh on future supply
Turning to the housing market, the number of new houses being approved remains weak. WA recorded 1018 housing approvals for the month of September, down 12.8% from August. While still the second most recorded in a month this year, approvals remain well below historical levels as lending conditions are tight for borrowers while skill shortages and high costs continue to plague builders. The upshot of this is housing supply is likely to remain weak in about a year’s time, which is when these houses will start to come online.
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