The latest monthly figures show the pace of inflation rose in April, following three consecutive months of decline.
The Australian Bureau of Statistics (ABS) monthly Consumer Price Index (CPI) indicator rose 6.8% in the twelve months to April 2023. This represents a 0.5% month-on-month increase in annual inflation from March (6.3%).
Headline inflation had been on a downward trajectory since peaking in December 2022 (8.4%). The new monthly reporting series showed a weakening rate of annual inflation between January (7.4%) and February (6.8%) 2023.
However, these latest statistics reveal that, if not kept in check, inflation can rebound and drive prices higher.
The most significant contributors to April's inflation figures were increased costs in the areas of housing (+8.9%), food and non-alcoholic beverages (+7.9%), transport (+7.1%) and recreation and culture (+6.%).
Rents rose (+0.8%) from an annual increase of 5.3% in March to 6.1% in April, exacerbating an already tight market.
Volatile price movements may skew inflation data
In a media release ABS head of price statistics Michelle Marqardt pointed out that, at times, some goods may experience erratic price fluctuations as a result of supply issues, tax, legislative changes or other external factors.
"It’s important to note that a significant contributor to the increase in the annual movement in April was automotive fuel. The halving of the fuel excise tax in April 2022, which was fully unwound in October 2022, is impacting the annual movement for April 2023," she said.
“It can be helpful to exclude items with volatile price changes from the headline CPI to provide a view of underlying inflation. When excluding these volatile items, the annual movement of the monthly CPI indicator was 6.5 percent in April, lower than 6.9 percent recorded in March."
Volatile items removed from the series were auto fuel (see chart below), fruit and vegetables, and holiday travel.
While the stats (see below) show inflation rising (+0.5%) month-on-month in April, the same figure - excluding volatile items and holiday travel - actually reports a fall (-0.4%) in the price index between March (6.9%) and April (6.5%).