The monthly CPI growth figure has remained steady now for three months in a row, rising by 3.4 per cent. However, removing volatile items (fruit & vegetables, automotive fuel and holiday travel and accommodation) the monthly growth rate fell to 3.9 per cent, down from 4.1 per cent the month prior. High rental costs continue to impact housing inflation. Rents increased by 7.6 per cent over the 12 months to February 2024.

Inflation in the insurance sector is again proving sticky, with insurance costs rising by 8.4 per cent, up from 8.2 per cent over the year to January 2024. Education costs also rose at a faster pace than the year prior, up to 5.1 per cent, from 4.7 per cent.

While the RBA would no doubt like to see this monthly inflation figure falling at a faster pace, the good news for borrowers is that the biggest drivers of inflation currently – rents and insurance – are not sensitive to movements in the cash rate. In fact, any decrease to the cash rate is more likely to have a dampening impact on rental inflation, as there is a strong correlation between rising home loan interest rates and rising rents. That being said, today’s figure doesn’t change the outlook for future cash rate cuts, with the first cut still likely towards the end of Q3 2024 or even early Q4.