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Latest inflation figures signal steady interest rates

31 January, 2014

Inflation figures for the December 2013 quarter show that the price level rose by 0.8 per cent in the final quarter of last year.

Overall inflationary pressures remain modest, says the Housing Industry Association (HIA), the voice of Australia's residential building industry.

Underlying inflation (the RBA's preferred measure of inflation) was up by 0.9 per cent in the December 2013 quarter with the annual rate sitting almost exactly in the middle of the RBA's target range. This result confirms that interest rates are likely to remain at all-time lows for the foreseeable future.

"Today's figures add further fuel to the notion that interest rates will remain at all-time lows for a considerable amount of time to come," commented HIA senior economist, Shane Garrett.

"There is no justification to depart from current settings while inflation is under control and while economic growth continues to be below trend.

"Domestic manufacturers will be encouraged to see that import prices are coming under pressure.

"After several difficult years, Australian manufacturers are finally starting to see their price competitiveness receive a boost.

"It is encouraging to see the rate of housing cost a little below its medium term trend rate.

"However, at 4.3 per cent, day-to-day housing costs are growing much faster than the general price level. This shows that more needs to be done by policymakers in making housing more affordable."

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