Inflation falls, but don’t expect home loan pain to ease, says Westpac and NAB | The Business
Annual headline inflation fell below market expectations – from 4.6 to 4.2 per cent in April – driven lower by the fuel excise cut.
But the underlying measure did tick up, and economists warn it will get worse in the months ahead as the full impacts of the Middle East war flow through to prices.
The main drivers of inflation were power prices which surged after the energy rebate ended.
Rent increases also contributed to annual inflation, and the cost of building new homes accelerated because of rising material and oil costs, which also drove up postal services.
But fuel prices did fall in the month after the excise was halved. The average price of regular unleaded petrol fell while diesel rose.
Treasurer Jim Chalmers says the fuel excise cut took some of the sting out of price pressures from the Middle East conflict, which has seen oil prices surge while the Strait of Hormuz remains effectively closed.
But Shadow Treasurer Tim Wilson says the government’s not doing enough.
Underlying inflation is rising and stuck above the RBA’s target band of between 2 and 3 per cent.
While the expectation by all four big banks, CBA, ANZ, Westpac and NAB is for the central bank to leave interest rates on hold in June, mortgage borrowers may not be out of the woods just yet.
Westpac chief economist Luci Ellis says they’re expecting more rate hikes later this year, just not in June. While NAB chief economist Sally Auld tells The Business she’s expecting one more rate rise in August.
CBA and ANZ are forecasting rates will remain on hold for the rest of the year.
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