<\/p>\n
Housing construction costs are part of the biggest measure in the CPI.<\/p>\n
ANALYSIS<\/p>\n
Murmurs of a rate cut are growing after the latest ABS inflation numbers were released.<\/p>\n
Today\u2019s data showed the consumer price index (CPI) for May has fallen month on month to hit 4 per cent.<\/p>\n
MORE:Rent crisis sees thousands of homes vanish from market<\/a><\/p>\n This represents the second straight month of falls.<\/p>\n The hot air balloon of inflation that has been soaring overhead for months now has begun to descend. It\u2019s coming down slowly for now, but if it picks up pace, the RBA may need to blast a short burst on the bellows in the form of a rate cut here and there to stop it from being a rough landing. <\/p>\n Bring her down easy Governor Bullock. Picture Mike Batterham<\/p>\n Should unemployment numbers out tomorrow see another rise from the 4.5 per cent they hit in April, the case for a cut will strengthen, as the central bank walks the tightrope between stubbornly high inflation and a looming recession.<\/p>\n Last month, the headline CPI came in at 4.2 per cent, which was a solid fall of 0.4 per cent from the March numbers.<\/p>\n An uncomfortable number<\/p>\n While headline inflation is headed in the right direction, the RBA will be concerned by its preferred indicator, the trimmed mean. This measure takes out some of the more volatile items in the inflation basket, such as fuel. In May, trimmed mean inflation rose to 3.6 per cent, up from 3.4 per cent in April, which was in turn up 0.1 per cent from March.<\/p>\n This number is travelling in the wrong direction and poses a significant problem. The central bank really needs to see this begin to reduce and head back towards its 2-3 per cent preferred target band.<\/p>\n<\/p>\n