Biggest sign yet that mortgage interest rates could be about to drop – as bombshell inflation figures are released

Australian home borrowers could in be line for rate cuts soon with inflation plunging.

Headline inflation, also known as the consumer price index, fell to 2.8 per cent in the year to September, marking a steep drop from 3.8 per cent in the June quarter.

The quarterly figure is good news because inflation is now within the Reserve Bank’s 2 to 3 per cent target. 

This makes an interest rate cut in 2024 a live option, despite RBA Governor Michele Bullock repeatedly ruling out any relief before Christmas.

Headline inflation fell as a result of cheaper electricity and petrol prices.

Underlying inflation or the trimmed mean, stripping out volatile price movements for an average, was higher at 3.5 per cent but it represented a big drop from 4 per cent in the June quarter. 

The federal government’s $300 electricity rebates led to energy price plunging by an annual pace of 24.1 per cent in September.

Former Queensland Labor premier Steven Miles lost Saturday’s election after introducing a one-off $1,000 electricity rebate. 

This less comprehensive monthly data from the Australian Bureau of Statistics had headline inflation growing by just 2.1 per cent over the year – putting it on the low side of the RBA’s 2 to 3 per cent target. 

Its underlying measure of CPI had price growing by just 2.7 per cent when volatile items like fruit and vegetables, petrol and holiday travel were excluded.

Food was very mixed with fruit and vegetable prices soaring by 9.1 per cent over the year, but dairy prices falling by 0.2 per cent as meat and seafood prices rose by just 0.9 per cent. 

Tobacco had the biggest increase of 12.9 per cent owing to excise indexation in September. 

But rents rose by 6.6 per cent – or more than triple the monthly headline number – in a clear sign high immigration prolonging a rental vacancy crisis.

Services inflation is still an issue too with the quarterly figures showing a 6.2 per cent increase for insurance and financial service and a 6.4 per cent rise in school costs. 

Health costs went up by 4.8 per cent but transport costs fell by 0.9 per cent, after Queensland’s former Labor government introduced 50 cent transport fares. 

Headline inflation, also known as the consumer price index , fell to 2.8 per cent in the year to September, marking a steep drop from 3.8 per cent in the June quarter