The monthly CPI remained steady in January at 3.4 per cent, although it showed a moderate decline when removing volatile items and holiday travel. Housing, particularly rents, continue to put pressure on the inflation rate, with rents rising 7.4 per cent over the year to January 2024, which was the same rate recorded in December.

Insurance and financial services cost inflation also remained high, and steady, at 8.2 per cent. There was a modest increase in food and non-alcoholic beverage inflation, caused mainly by an increase in the price of fruit and vegetables, which declined in price by 2.2 per cent over the year to December, but increased again by 1.6 per cent over the year to January. Given fruit and vegetable prices do jump around based on seasonal and weather factors, this should not give the RBA much cause for concern.

Overall, the rate remaining steady is positive news for borrowers. In particular, the RBA will be pleased to see some easing of inflation in the Health Services sector (from 4.7 per cent to 3.9 per cent), although other service sectors, such as education, have more ‘sticky’ inflation rates, with inflation in this category remaining steady at 4.7 per cent. The RBA, however, will need to see more significant easing in monthly inflation before it even begins to consider a cut to the cash rate.