Inflation easing
After a hundred and more articles on "Taylor Swift inflation" the actual inflation figure came in at only 3.4 per cent for the year to January 2024.
That was lower than the 3.6 per cent expected by market economists.
Maybe we'll see some Swifty impact in February, but not yet!
Source: ABS
Over the past month, the measured year-on-year prices declined.
Generally, then, the disinflationary trend remains well intact, and this was a happy result for policymakers, with the return to inflation target tracking a little bit better than previously expected.
There's still an ongoing issue with rents and new housing costs.
Housing construction and major renovations fell sharply in the final quarter of 2023 as the pipeline shrinks (and with yet more building firms going bust), so the materials and trades price pressures should start to ease here too.
Overall, for both 3-month and 6-month annualised figures inflation is within the 2 to 3 per cent target band on these figures.
Good news, and plenty softer than most of the economist forecasts, some of which ran as high as 4 per cent.
James Foster ran through the details
here.
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Keep an eye out for the upcoming podcast episode where I spend an hour with Dr. Cameron Murray, author of The Great Housing Hijack.
It was a very interesting conversation, where Cam explained how households tend to spend a consistent amount of their income on rent over time, in most developed economies.
For this reason, as incomes rise over time, so do rents.
This kind of makes sense to me, based on personal experience - whenever we’ve rented the starting point has been our allocated budget.
And while housing prices can rise and fall through the cycles, they seldom fall too far before yields become relatively all too attractive and investors bid prices all the way back up again.
Cam also explained the role of vested interests in property, why rezoning alone can't fix housing supply, and how bridesmaid suburbs are great investments as they benefit from the ripple effect.
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