The Australian Bureau of Statistics (ABS) has released the Consumer Price Index (CPI) data for January which reveals a fall in the rate of inflation. The rate dropped from December’s 8.4% to 7.4% to the end of January. With the Reserve Bank of Australia (RBA) raising interest rates to address rising inflation, the question for many will be if this latest data is a positive sign for interest rates.
In some ways it is a positive sign. As the RBA mentioned in February and Treasurer Jim Chalmers mentioned last week, it does appear that inflation peaked in December. That will be welcomed as it could indicate an easing in price rises moving forward. This could be significant for caravan buyers in relation to further prices on new models.
But caution has been advised by the Treasurer in relation to individual monthly statistics. In addition, a fall in inflation based on one month of data does not necessarily mean there will be no further increases in interest rates.
The RBA has now lifted the cash rate 9 times, at each of its Board meetings, since May 2022. These decisions have been in response to the extremely high inflation rate. The Board is working to bring inflation back to its target range of 2-3%.
The cash rate is the overnight lending rate for banks and other lenders. This rate is an important contributor to the costs for lenders. As such, the increases are passed through as increases in interest rates on their lending products. That includes consumer loans such as caravan finance interest rates.
For buyers planning a new caravan with finance, staying up to date with movements in inflation can be as important as being aware of the interest rates market. High inflation impacts costs of living which in turn may affect how a buyer would like their new caravan finance structured. In particular in regard to ensuring the monthly repayments work with the household budget, even in inflationary times.
CPI Data – January 2023
The ABS reported the CPI to the end of January, with inflation sitting at 7.4%. The Head of Prices Statistics at the ABS, Michelle Marquardt, said that while the was a drop from the rate as at end of December, the January figure is still second largest rise recorded going back to 2018 when this monthly of CPI data started.
According to the ABS, the January data indicates that inflation is continuing at a high level. The Bureau specified the biggest contributors to inflation for the month as housing including rents, food which includes non-alcoholic beverages and the culture and recreation category which includes holiday travel and accommodation.
In the housing sector, rents and prices of new dwellings were the key contributors. This category increased 9.8% in the first month of 2023. This is a small drop in the 10.1% recorded in the last month of 2022. In the food category the increase of 8.2% for January was below the 9.5% in December. A fall in fruit and vegetables of 2.3% was noted.
The holiday sector travel and accommodation saw a 29.3% increase in December. January saw that drop back to 17.8%.
Ms Marquardt notes that price volatility in some sectors can impact the CPI. She notes prices of fuel, fruit and vegetables and other seasonally-related pricing such as holiday travel and accommodation. In order to reveal the underlying rate of inflation, the more volatile elements are excluded from what is known as headline inflation. This can be a more useful figure for certain purposes.
Those following the RBA monthly announcements may recall the mention of headline and underlying inflation. Underlying inflation has dropped from 7.4% as at the end of December to 6.7% at the end of January.
Treasurer’s Comments – Inflation and GDP
The latest GDP data was also announced on the same day as the latest inflation data. Treasurer Jim Chalmers commented on the results, saying that it appeared that inflation had peaked at the December figure.
But he recommended caution when considering just one month’s inflation figures. He said the high inflation looked like persisting for longer but the January figures were encouraging.
In relation to the GDP data which revealed a slowing in economic growth – just 0.5% for the December quarter, the Treasurer said the trend had been expected. This was
Caravan Finance Interest Rates
The March decision on interest rates will be made by the RBA on Tuesday 7th March with these latest figures part of the considerations. The Board has said as early as last month that more rate rises are likely to be considered. At that meeting, only 0.25% and 0.5% rises were discussed. Whereas at the December meeting the option of holding rates was also discussed.
Caravan buyers will no doubt be hoping that the RBA Board once again puts all options on the table for the decisions over coming months. Jade Caravan Finance can assist buyers achieve cheap caravan loans with individually sourced and negotiated outcomes to ensure repayments work with household budgets.
Contact Jade Caravan Finance for cheaper caravan finance interest rates
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