Why IMU is a multi multi bagger, page-20579

This should be good news for the ASX tomorrow.

Inflation down to 4.3% (from a peak of 8.4% six months ago.

Inflation rate slows to two-year low of 4.3% in November: ABS | The Canberra Times | Canberra, ACT

Inflation hits near two-year low, but govtwarns fight is 'not over yet'

The monthly inflation rate has slowedto its weakest rate in almost two years, confirming that price pressures are continuing to ease and adding to hopes that interest rates have peaked.

The monthly consumer price index grewat an annual rate of 4.3 per cent in November, down from 4.9 per cent theprevious month and almost half the peak reached in December 2023, according tothe Australian Bureau of Statistics.

Watch: How does inflation affect thecost of living?

The last time the monthly CPI was solow was in January 2022.

Treasurer Jim Chalmers said theinflation slowdown was "encouraging".

"[The figures] show that we aremaking progress ... in this fight against inflation, but the fight againstinflation is not over yet," Dr Chalmers said.

"We are coming at this inflationchallenge from every angle: competition, migration, infrastructure, thecost-of-living relief that we're rolling out, budget repair, investments in oureconomy.

"But we know that there's morework to do because people are still under pressure."

"We are prepared to consider, inthe May budget, any additional help that we could provide in the usualresponsible and affordable way," the Treasurer said.

Despite the slowdown, inflation remainswell above the Reserve Bank of Australia's 2 to 3 per cent target band, makingany move to ease interest rates unlikely in coming months.

While the cost of clothes and householdgoods has actually shrunk in the past 12 months and prices for other goods likefood and fuel is slowing, the Reserve Bank is concerned that inflation in thecost of services will prove to be more stubborn.

Among these is housing, which remainsone of the key drivers of inflation. Housing costs jumped 6.6 per cent inNovember and insurance and financial services were also a major source of pricepressure, surging by 8.8 per cent.

Many other services are not included inthe monthly inflation data and December quarter figures due out at the end ofthe January are expected to provide a more accurate guide to price momentum inthe economy.

ABS head of price statistics, MichelleMarquardt, said that, excluding volatile items like food, fuel and holidaytravel, November's inflation slowdown was more modest, decelerating to 4.8 percent.

HSBC chief economist Paul Bloxham saidthe November reading showed that inflation was easing broadly in line with RBAforecasts, supporting the case for interest rates to remain on hold butdelaying any prospect of a rate cut until early next year.

The RBA expects the decline ininflation to be gradual and does not forecast it to fall within its target banduntil late next year.

Mr Bloxham said housing costs,particularly rents, were one of the "stickier" components ofinflation and the central bank would feel that "getting it to fall backinto its target band, may still prove to be challenging and will take some time".

He predicted that at its Februarymeeting the RBA board would voice ongoing concern about price pressures eventhough it would leave interest rates untouched.

Betashares chief economist DavidBassanese was more optimistic.

Mr Bassanese said the Reserve Bank had"likely finished raising rates" and predicted they would be cut by0.5 of a percentage point by the end of the year.

Shadow treasurer Angus Taylor said theABS figures showed the country had one of the world's "most entrenched andpersistent inflation problems".

"[The] data shows [sic] the priceof essential items remain too high. Unfortunately, there are no signs thatthings will get any easier in 2024," Mr Taylor said, accusing thegovernment of "failing policies [that] are only making a bad situationworse".

But Ms Marquardt said the federalgovernment's electricity and rental assistance measures were helping to draginflation lower.

She said electricity prices have risenby 8.8 per cent since June last year but the increase would have been 19 percent without government rebates, while government assistance had contained therise in rents to 7.1 per cent instead of 8.8 per cent.

Cheaper fruit andvegetables is helping drag inflation lower. Shutterstock

Dr Chalmers said these results showedthat the government's strategy to fight inflation was working.

"It shows clearly the positiveimpact of the government's policies helping to put downward pressure oninflation," he said.

The statistician said good weather wasboosting the supply of meat, fruit and vegetables, helping hold food pricesdown.

Australian inflation down to 4.3%