The Australian Bureau of Statistics (ABS) released consumer price index (CPI) data for the June 2014 quarter earlier this week.
The data showed that headline inflation increased by 0.5% over the quarter to reach 3.0% over the year. Headline inflation now sits at the top of the Reserve Bank’s (RBA) target range of 2% to 3% and is at its highest level since December 2011.
The RBA likes to focus on measures of underlying inflation to get a less volatile read on consumer price movements. Over the 12 months to June 2014, the trimmed mean was recorded at 2.9% and the weighted median CPI figure sat at 2.7%, both of which are lower than headline inflation.
With core CPI readings close to the top of the RBA’s inflation target there is likely to be less speculation about a further rate cut, unless we see a marked fall in consumer prices over the September quarter.
Looking at the components of CPI, the largest increases over the year have been recorded for: alcohol and tobacco (7.1%), education (5.1%), health (4.9%), housing (3.9%) and recreation and culture (3.3%).
Clothing and footwear (-0.6%) and communication (-0.3%) were the only components of CPI to have recoded a fall over the year.
Furnishings, household equipment and services (1.0%), insurance and financial services (1.0%), food and non-alcoholic beverages (2.5%) and transport (2.7%) all recorded annual increases below the rate of headline inflation.
The ANZ-Roy Morgan Weekly Consumer Sentiment Index was recorded at 108.7 points which was a 3.4% rise over the week. The index is now at its highest level since early May after having slowly increased over the past 6 weeks.
Although it is a positive sign that consumer confidence is slowly rebounding following the Federal Budget, sentiment is inherently volatile. Given this, it will be interesting to see whether this trend continues and results in a renewed preparedness of households to spend.
Weekly Clearance Rates
Auction clearance rates increased over the week with the capital city weighted average clearance rate recorded at 69.3%, slightly higher than the 67.2% over the previous week.
There were 1,515 auctions held over the week compared with 1,180 over the same week a year prior however, auction numbers were also up from 1,421 the previous week. RP Data collected 88% of all auction records.
The major auction markets of Sydney and Melbourne continued to record healthy auction results which were higher than the previous week.
Sydney’s clearance rate was 75.2% across 517 reported auctions, which was slightly down from a clearance rate of 75.6% the previous week.
Melbourne’s auction market recorded a clearance rate of 68.4% across 594 collected auction results. The clearance rate in Melbourne last week was up from 66.4% the previous week.
Weekly Advertised Listings
Over the four weeks to 20 July, there were 36,293 newly advertised properties listed for sale nationally. New listing numbers have continued to trend lower, which is likely to be mostly a seasonal phenomenon.
Nationally, new listings have moved to be -9.0% lower than a year ago, while across the combined capital cities new stock being added to the market is -4.4% lower than at the same time last year.
There are currently 223,228 properties listed for sale across the country. Total listings at a national level were -9.0% lower compared with the same time last year.
Across the combined capital cities, total listings remain -12.2% lower than a year ago, highlighting that total stock levels have reduced.