Very good news for inflation!
Inflation fell faster than expected in the December quarter, down to just +0.6 per cent.
There was still some inflation out there, mainly from tobacco excise, painfully surging insurance prices, and new dwelling costs (again), but overall this was an outstanding result considering where we've come from.
After a number of years of Aussies getting used to very low inflation, the pandemic lockdowns and supply chain disruptions created a nasty spike of inflation over the past year or two...but this is now moderating.
The core measures of inflation over the year fell back fairly dramatically from 5.2 per cent to 4.3 per cent (and annualising the recent numbers suggests the job is essentially almost 'done').
From an annual inflation perspective heading down about as fast as they went up, and we may well now discover that central banks have over-tightened somewhat.
Rental price inflation slowed this quarter, though this was driven by the Commonwealth Rent Assistance according to the Australian Bureau of Statistics. The rental crisis remains far from fixed, however.
Overall, Australia has belatedly caught the global disinflationary pulse, and there's more to come here as lower energy costs flow through.
Overall, this was pretty much sensational news for Australia's central bank.
There are plenty of signs that activity in the economy is stalling, and the way things are going overseas we could even see interest rate cuts here before the US.
Looking further out, markets are expecting modestly lower interest rate over the next couple of years.
I expect a very busy year ahead for realtors and buyer's agents as first homebuyers and upgraders scrap to get their hands on a dearth of stock.
The worst case for property is basically dead for the next few years, but nevertheless there are parts of the country where higher mortgage rates are still seriously hurting borrowers.
As ever, James Foster ran through the detailed inflation numbers
here.
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