"It's welcome news that the worst of inflation is behind us, but Australia is far from out of the economic woods yet," said Innes Willox, the chief executive of the national employer association The Australian Industry Group.
The Australian Bureau of Statistics reported that headline consumer inflation rose by 2.4% p.a. in the December quarter of 2024, its lowest level since early 2021. The important Trimmed Mean measure – which removes highly volatile prices – dropped to 3.2% p.a.
This data has come in below the Reserve Bank of Australia's forecast path, indicating that consumer inflation is moderating faster than expected, but that doesn't make certain any reduction in mortgage rates in the near term.
"It is welcome news that we are finally getting towards the last mile of inflation control in Australia, which will ease cost of living pressures on many households," Mr Willox said.
"However, it is concerning that this outcome has been achieved in very weak economic conditions. Australia is in its longest period of sustained low growth since the mid-1990s, consumer demand remains subdued, and much of the private sector currently faces recession-like conditions.
"While the labour market remains a rare bright spot, we know its resilience is only because of a massive public sector hiring binge that can't last.
"Add to this the volatility in global financial markets at the moment, uncertainty about where President Trump's economic policies will land, and a federal election only months away, this is an increasingly challenging environment for monetary policy.
"We still have a lot of work to do – particularly in getting the private sector engine firing again – to return Australia to a stable economic footing," Mr Willox said.
