Inflation continues to cool — but what about the cost of living?

It looks like the endless rate hikes could be coming to, well, an end. But that doesn’t mean the cost of living will go down

Newly appointed Reserve Bank of Australia governor Michele Bullock (Image: AAP/Mick Tsikas)
Incoming Reserve Bank of Australia governor Michele Bullock (Image: AAP/Mick Tsikas)

More good news for anyone still paying attention. The latest consumer price index (CPI) indicators shows inflation is continuing to abate. It was at 5.4% in June, but over the year to July the price rise over the last year is down to 4.9%. That’s actually less than the minimum wage decision of 5.75% meaning some people are getting ahead! Wow!

The mellow results send a cool breeze through our central bank. The nervous central banker can relax a little: we are following America down. US inflation is down to around 3% and ours is headed in the same direction. The rate hike frenzy is almost certainly over at this point. Official rates of 4.1% are looking like our top, for now at least. Markets are pricing in basically no change at all in the next 18 months. 

What comes next could be a very disappointing time for Reserve Bank (RBA) board meeting junkies. A generation has been classically conditioned to tremble with dread and excitement on the first Tuesday of the month. Their dopamine receptors may have to learn to do without. New RBA boss Michele Bullock is likely to lead the bank through a dull, dry desert of stability after she takes over following the expiration of the current governor’s term in mid-September. 

Read more about the inflation situation…

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