Inflation has significantly slowed, with underlying inflation dropping to 3.2% in December, the lowest rate in three years. This development raises the possibility of a pre-election interest rate cut in February.

Key points for builders:

• Inflation impact: Underlying inflation fell sharply, down from 3.6% in September.
• Housing cost relief: The cost of building a new home slowed to 2.9%, from a peak of 20.7% in 2022, thanks to easing material costs and reduced consumer demand.
• Government support: Energy rebates contributed to a decrease in electricity prices by 25.2%, while rent inflation also slowed.

Treasurer Jim Chalmers aims to highlight this as progress in managing cost-of-living pressures. Builders may see continued relief in construction costs if inflation continues to ease.