John Rolfe: Why inflation rise may be good news for homeowners

Inflation has accelerated to 3.8 per cent but hundreds of thousands of homeowners and the PM will be buoyed at the news. John Rolfe explains why.

A rate rise next week now appears unlikely – that’s the key takeout from these new inflation figures.

While headline consumer price index accelerated slightly to 3.8 per cent, the Reserve Bank of Australia’s preferred measure, the “trimmed mean”, slowed to 3.9 per cent over the year to the end of June.

That’s an outcome that’s probably acceptable to Michele Bullock and the RBA board.

The news may prove to be a huge relief for mortgagors, who’ve endured 13 rate rises since May 2022.

Had the trimmed mean come in at, say, 4.1 per cent or higher, then they may well have felt compelled to tighten the screws to get the CPI to fall faster. The RBA wants it to be at 3 per cent by the second half of next year.

There are many economists who believe the next set of inflation data from the Australian Bureau of Statistics will show a big fall, partly because a large increase in the third quarter of 2023 will drop out of the mix.

The latest figures are probably acceptable to Michele Bullock and the RBA board

Anthony Albanese will be relieved by today’s inflation figures. Picture: NewsWire / Max Mason-Hubers

If that proves correct, then there won’t be any more interest rate rises – a huge relief for mortgagors, who’ve endured 13 rate rises since May 2022.

A reduction may even be not too far away. Some economists are pointing to a downward shift in November, after the next CPI figures. Money markets also moved to support this view on Wednesday.

Anthony Albanese may be rethinking how to time the next election to take advantage of an RBA rate cut (or cuts), given the cost of living is the number one issue for many if not most voters.

Originally published as John Rolfe: Why inflation rise may be good news for homeowners