Wealth Up, CPI Down, Rates Steady

Three different pieces of important financial data have been released in the past week, which show the broader impact property has on the Australian economy.

Firstly, Australian Bureau of Statistics data (ABS) shows household wealth is increasing in Australia, rising 2.7% in the June quarter. Total household wealth has now hit $470.1 billion - driven by strong growth in residential property values and superannuation balances. The value of property rose 1.9% or by $205.2 billion.

Secondly, the latest ABS Consumer Price Index out this week shows that CPI hit 3% growth in August, up from 2.8% in July.

ABS head of prices statistics, Michelle Marquardt, says the main contributors to the increase are housing and health costs. The growth in housing costs was driven by increases in electricity.

And thirdly, the Reserve Bank of Australia Board met this week and decided to keep interest rates on hold at 3.6%.

The unanimous decision says that while the housing market is strengthening - a sign that recent interest rate decreases are having an effect - recent data suggests that inflation in the upcoming September quarter may be higher than expected.

It says financial conditions have eased since the beginning of the year, which is having some impact, but it will take some time to see the full effects of earlier rate reductions.