Inflation in Australia remains persistent, increasing the likelihood of further rate hikes.
The Consumer Price Index (CPI) rose 1.2% over the September quarter, contributing to a continued rise in annual inflation. The Australian Bureau of Statistics’ (ABS) quarterly CPI indicator rose 5.4% in the year to September 2023.
The biggest contributors to September's quarterly increase were automotive fuel (+7.2%), electricity (+4.2%), rents (+2.2%) and new dwellings purchased by owner occupiers (+1.3%). Inflation was tempered by price falls in child care (-13.2%) and fruit and vegetables (-3.7%).
“CPI rose 1.2 percent in the September quarter, higher than the 0.8 percent rise in the June 2023 quarter. The rise this quarter, however, continued to be lower than those seen throughout 2022,” ABS head of prices statistics Michelle Marquardt said.
Monthly data changes course
Although the pace of annual inflation has slowed somewhat since the June quarter (6.0%), the monthly CPI indicator recorded a marked rise in September (5.6%). This is the second consecutive monthly hike in consumer prices, following a jump in August (5.2%). Prior to this, the monthly series had been consistently trending downward for four months.
However, It’s important to note that volatile price movements can distort the monthly CPI data drops. Volatile items include fruit and vegetables, automotive fuel, and holiday travel and accommodation. It can be helpful to exclude these items from the headline CPI indicator to provide a more accurate view of underlying inflation.
Excluding volatile items, the monthly CPI results were more stable at 5.5% in both August and September.