The March 2015 quarter CPI figures reinforce the RBA’s underlying measures which signpost stable inflation. This should translate into a sustained period of low interest rates and be good news for home owners.

In the March quarter, the CPI rose by 0.2% and an annual rate of 1.3%. These figures are below the RBA’s target zone of 2-3% and should not put pressure on the interest rate outlook. The annual changes for the analytical series of trimmed mean and for the weighted median were 2.3% and 2.4% respectively and compare to the changes for the twelve months to the December quarter 2014 of 2.2% for the trimmed mean and 2.4% for the weighted median.

The housing group increased by 0.8% for the December quarter and compared to the September quarter increase of 0.5% and an annual rate of increase of 2.7%. The main increases in the March quarter for the housing group were for new dwelling purchases, which increased by 0.9% and electricity which increased by 1.9%. Rents increased by 0.4% for the quarter and 2.1% for the year.

The impact of increased investor activity in the housing sector is flowing through to lower increases in rents. The increase in the past twelve months in Sydney at 2.9% was the lowest yearly increase since the December quarter of 2006. With inflation under control combined with a slow down in housing finance, it’s reasonable to expect that the RBA Board will not be increasing interest rates in the medium term, providing a stable outlook for home buyers.