Inflation Eases Amid Energy Subsidies: Mixed Reactions Prevail
Inflation Eases Amid Energy Subsidies: Mixed Reactions Prevail
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
Homeowners may find a glimmer of hope as inflation eased to 3.5% in July, revealing a slight dip from June's 3.8%, according to the latest Consumer Price Index (CPI) figures.
Despite the improvement, discussions around the Reserve Bank of Australia's (RBA) stance on the cash rate remain skeptical.
This monthly CPI report will be the last inflation update before the RBA's upcoming cash rate meeting on September 24. Analysts are cautious, however, indicating that the marginal CPI dip might not be enough to sway a rate cut in September. The subsequent monthly update and more comprehensive quarterly data are due later this year, shedding more light on inflation trends.
The Australian Bureau of Statistics (ABS) identified a significant contributor to the CPI fall: the federal government's $300 energy bill relief fund. This subsidy slashed household electricity costs, up to $75 per quarter, rolling out first in Western Australia and Queensland, with other states to follow.
Warren Hogan, chief economist at Judo Bank, lauded the subsidy’s immediate impact on cost reduction but pointed out its temporary nature. "Government interventions like these offer short-term relief but don’t address the underlying issue," Mr. Hogan told Sky News. "They might help with living costs now, but inflate long-term expectations."
Mr. Hogan also noted, "Without factoring in the rebate, inflation remains stagnant. Homeowners awaiting rate cuts might be disappointed unless unforeseen circumstances prompt the RBA."
David Bassanese, Betashares' chief economist, agreed the subsidy likely reduced inflation by about 0.2%, cautioning that electricity prices may rebound once the subsidy phase ends. "The RBA isn't likely deceived by these temporary fixes. Sustained reduction in underlying inflation is essential before they consider altering the cash rate," Bassanese remarked.
On the contrary, Treasurer Jim Chalmers stood by the subsidies, emphasizing their role in reducing living costs and countering inflationary pressures. "Assistance with electricity bills is neither artificial nor insignificant-our approach is yielding tangible benefits in curbing inflation," Chalmers argued.
However, Shadow Treasurer Angus Taylor criticized the government's performance, pointing out persistent high costs in housing, food, and transport. "Despite superficial gains, Australia’s inflation is still alarmingly high compared to global counterparts," Taylor remarked. He called on the government for more substantive measures to address "the root of the inflation challenge."
According to ABS acting head of price statistics, Leigh Merrington, volatile items like fuel and fresh produce often distort CPI figures. Excluding such variables, July's underlying inflation stood at 3.7%, a modest drop from June's 4.0%. Still above the RBA’s 2-3% target, these readings fuel mixed feelings about imminent rate cuts. While some anticipate a pre-Christmas cash rate reduction, others, including RBA Governor Michele Bullock, counsel patience.
During August’s rate meeting, Bullock maintained rates at 4.35%, stressing that tackling stubborn inflation remains paramount. “We aim for a narrow path to lower inflation without sparking a recession. Many Australians are struggling, but curbing inflation is essential for long-term economic stability,” Bullock reiterated.
Financial experts and homeowners alike await the forthcoming data releases, which will potentially shape the economic trajectory in coming months. Originally sourced from the August 2024 article in NCA NewsWire by Jessica Wang.
Published:Thursday, 29th Aug 2024 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
In January 2026, Australia's housing market witnessed a remarkable 10.6% increase in home loan approvals compared to the previous month, significantly surpassing December's 4.7% growth. This surge indicates a robust demand for housing credit, reflecting the market's resilience despite existing challenges. - read more
As we progress through 2026, the Australian property market is poised for continued growth, with forecasts predicting a 4.8% increase in property prices across capital cities. This projection follows an 8.6% rise in 2025, indicating sustained momentum in the housing sector. - read more
The Reserve Bank of Australia (RBA) is expected to implement an interest rate hike in early 2026, a move that could significantly influence the trajectory of property price growth. This decision comes in response to rising inflation and aims to stabilize the economy. - read more
October 2025 marked a significant milestone for first-time homebuyers in Australia, with loan applications surging by 39.2%. This remarkable increase is largely attributed to the federal government's expansion of the 5% Deposit Scheme, which has made homeownership more accessible to a broader segment of the population. - read more
In the third quarter of 2025, Australia's property market witnessed a significant shift as investors accounted for two out of every five home loans. Data from the Australian Bureau of Statistics (ABS) revealed that over 57,000 investors borrowed nearly $40 billion during this period, marking a 17.6% increase from the previous quarter. This surge underscores a growing trend of investor dominance in the housing sector. - read more
Buying a home is one of the most significant financial commitments you will make in your lifetime. Without a solid savings plan, you may find it challenging to gather the necessary funds for a home deposit. This can delay your home-buying journey and add unnecessary stress to an already high-stakes process. - read more
Welcome first-time home buyers! Embarking on the journey to purchase your first home can be both exciting and overwhelming. One of the crucial steps in this process is understanding and obtaining home loan pre-approval. - read more
Welcome to the exciting and sometimes complex world of real estate in Australia! If you are on the cusp of purchasing your first home, you've probably heard about stamp duty. But what exactly is it? Stamp duty is a form of tax imposed by Australian states and territories on property transactions. This tax is usually a percentage of the property purchase price or market value and is a legal requirement for most property sales. - read more
A credit score is a numerical representation of your creditworthiness. It is calculated based on your credit history, including factors like your payment history, the amount of debt you have, and the length of your credit history. - read more
When it comes to managing finances, one of the biggest stressors for homeowners is their mortgage. In Australia, many individuals and families struggle with mortgage stress, which can have a significant impact on their overall financial well-being. - read more
Need Help Finding a Home Loan?
Get your free home loan eligibility assessment and compare offers tailored
specifically to your circumstances.
All finance quotes are provided free (via our secure server) and without
obligation. We respect your
privacy.
"Mastering Home Loans: Navigating the Australian Mortgage Market"
