CPI release sparks calls for rate cut
A SMALL increase to inflation is another reason why the Reserve Bank of Australia should lower the cash rate next week, according to the Real Estate Institute of Queensland.
The Australian Bureau of Statistics released the updated consumer price index figures - up 0.1% for the March quarter - on Tuesday, showing a year-on-year growth of 2.2%.
REIQ chief executive Anton Kardash said the CPI figures were a further sign that the economy was in need of an "immediate pick-me-up".
"All of these signs point to an economy that is certainly not firing on all cylinders, a fact the Reserve noted in its April meeting when it lowered its expectation for growth," he said.
"The Reserve must act next week and must act decisively," he said.
HIA Chief Economist, Dr Harley Dale said that a 50 basis point cut next week would be "justified."
"The housing industry and wider Australian economy needs a further 75bps of interest rate cuts and there is nothing standing in the way of a 50bp move to get the ball rolling next Tuesday," he said.
"That would, admittedly, be a bold move for the RBA, but it would be entirely appropriate given the pulse of the Australian economy is not beating as fast as the Bank earlier expected."
The ABS figures showed the biggest cost increases over the March quarter were for pharmaceutical products, up more than 14%, and secondary education, up 7.7%.
The biggest falls in costs to consumers were in fruit, down 30% and international holiday travel, down 4.8%.