Not all goods and services rise or fall at the same level; over the June 2016 quarter, the ABS advised that the most significant price rises and falls were as follows:
|Price rises||medical and hospital services (+4.2 per cent),|
|automotive fuel (+5.9 per cent) and|
|tobacco (+2.1 per cent)|
|Price falls||domestic holiday travel and accommodation (–3.7 per cent),|
|motor vehicles (–1.3 per cent) and|
|telecommunication equipment and services (–1.5 per cent).|
Lower-than-expected inflation raises the likelihood of the RBA cutting the official cash rate again, with CommSec Chief Economist, Craig James, stating that inflation is stubbornly below the Reserve Bank’s 2-3 per cent target band.
“The only way that the Reserve Bank can seek to lift the inflation rate to the target band is by running the economy at a faster rate and that means cutting interest rates,” he said.
“So a rate cut will be on the agenda at the Reserve Bank Board meeting next Tuesday.”
Looking at current home loan data, it appears that many financial institutions have already priced in a further cut in the official cash rate.
Currently the average 1, 2 and 3-year fixed home loan rates on Canstar’s database for owner-occupiers are lower than the average standard variable and package variable rates.
|Table: Residential Home Loan Market – Snapshot of the current market (28/07/2016)|
|Standard Variable||Package Variable||1 Year Fixed||2 Year Fixed||3 Year Fixed||5 Year Fixed|
|Source: www.canstar.com.au, the search results do not include all home loan providers, and may not include all features relevant to you.|