Inflation is slowing down. What does this mean for you?
After a few tough years financially, there’s light at the end of the tunnel.
The inflation rate, having peaked at 8.9% in December 2022, has now dropped to 4.9% – lower than most economists forecasted.
Plus, further drops are in sight. Inflation is expected to drop to 4% by June 2024, before declining to 3.5% in December, according to the Reserve Bank of Australia (RBA).
By the end of 2025, we will hopefully see it decrease to 3%, bringing it to a standard rate (between 2% and 3%).
What might this mean for you and your finances?
Relief for your daily budget
In a nutshell, inflation is a measurement of how quickly goods and services are increasing in price.
So, a drop in inflation could mean relief for your daily budget.
Rather than having to account for prices – from groceries to haircuts – jumping at a rapid pace, they should stabilise for the foreseeable future.
Interest rate hikes are less likely
Lower inflation has already started to impact interest rate hikes. In December 2023, the RBA decided against increasing the cash rate, leaving it at 4.35% as Australia headed into Christmas.
There might be one more rise in early 2024, but from mid-2024, we can expect the RBA to cut interest rates, AMP’s deputy chief economist Diana Mousina told news.com.au.
If you’re repaying debts with variable interest rates – from credit cards to mortgages – this
is could be good news as interest rates are likely to stabilise in line with the cash rate.
Rather than having to worry about paying more and more interest, you might be able to budget for steadier repayments.
More cash in your pocket
Overall, the positive economic forecast means you
’ll probably might experience less stress in sticking to your daily budget – and maybe have money to spare.
Been putting your bigger financial goals aside to make ends meet? It could soon be time to pick them up again. Extra cash in your pocket could allow you to invest in a car, take the holiday of a lifetime, renovate your home or gain new qualifications.
A personal loan could be one way to do this. It gives you a lump sum, so you can pay upfront costs immediately, and then repay them over a period that suits you. Before applying, make sure you’re eligible, and check out what lenders will look at here.
Applying for a loan online with MONEYME takes just a few minutes – and funds could be in your account straight away if your application is approved.
The future is bright
After a difficult couple of years, it’s comforting to be able to look to the financial future with some optimism.