I hope you and your business have a successful 2025. Here’s some interesting economics, property and business news to begin the year:

RBA says inflation still “too high”
Landlords adjusting to shifting demand
Jobs market causing concern
Commercial investors targeting higher returns

The annual inflation rate ticked up from 2.1% in October to 2.3% in November, but remained under 3% for the fourth consecutive month, according to the Australian Bureau of Statistics.

That is an important milestone, because the reason the Reserve Bank of Australia (RBA) has kept interest rates high has been to reduce inflation – which peaked at 8.4% in 2022 – to its target range of 2-3%.

Unfortunately, though, ‘trimmed-mean inflation’, which peaked at 7.2%, came in at 3.2% in November. This is the RBA's preferred measure of inflation, because it eliminates volatile items from price calculations and is therefore regarded as a more accurate indication of underlying inflation than the headline inflation number.

he retail and office property sectors are continuing to evolve in the face of challenges from a shift towards shopping online and working from home.

Ray White Group Head of Research Vanessa Rader said the retail sector was demonstrating surprising resilience, particularly in prime locations.

“CBD retail cores are showing remarkable strength, with luxury retail expanding beyond traditional strongholds. Centres that successfully blend convenience-based retail, essential services and entertainment offerings are outperforming, as consumers seek experiences alongside traditional shopping,” she said.

Ms Rader said some CBD office landlords had also adapted well, although they still faced headwinds given that most capital city CBDs had vacancy rates above 10%.

The national unemployment rate ended the year at a low 4.0%, according to the Australian Bureau of Statistics, but an employer association has warned that the labour market has become reliant on government-funded jobs.

“Since the pandemic, the labour market has become increasingly driven by two groups: the public sector and the 'non-market' private industries of health, education and public administration. These industries have seen employment surge by 17% and 43% respectively since 2019. By contrast, the private sector has added only 9% more jobs,” according to the Australian Industry Group (Ai Group).

“In the year to the September quarter of 2024, these industries accounted for five in six (85%) of the 473,000 jobs created in Australia. The private sector was flat across the year, growing its employment by only 0.6%.”

Falling interest rates will reshape the commercial property market in 2025, according to forecasts from multinational property group Savills.

“The expected pivot in central bank policy domestically will help to stabilise prices, yet some pressures will remain. The market will remain competitive for select asset classes and unlock new opportunities for value-add and opportunistic investors,” Savills said.

As rates fall, buyer activity is expected to increase, particularly among large institutional investors.

“An increase in motivated sellers and capital recycling is expected to boost market liquidity, enabling redeployment opportunities for investors with renewed or increased allocation targets,” Savills said.