CPI rose 0.8 per cent in the June 2023 quarter
The Consumer Price Index (CPI) rose 0.8 per cent in the June 2023 quarter and 6.0 per cent annually, according to the latest data from the Australian Bureau of Statistics (ABS).
Michelle Marquardt, ABS head of prices statistics, said "CPI inflation slowed in the June quarter, with the quarterly rise being the lowest since September 2021. While prices continued to rise for most goods and services, there were some offsetting price falls this quarter including for domestic holiday travel and accommodation and automotive fuel.”
Quarterly CPI inflation
The most significant contributors to the rise in the June quarter were rents (+2.5 per cent), international holiday travel and accommodation (+6.2 per cent), other financial services (+2.5 per cent) and new dwellings purchased by owner occupiers (+1.0 per cent).
"Rents recorded the strongest quarterly rise since 1988, reflecting low vacancy rates amid a tight rental market. Rental price growth for flats continued to outpace the growth for houses.
"Higher demand for international travel, particularly to Europe with the start of the European summer peak season, led to price increases. These were partially offset by price falls for travel to South-east Asia and New Zealand as prices dipped following increases during the Christmas and school holiday periods in December and January,” Ms Marquardt said.
Fees and charges associated with real estate transfers were the primary contributors to the increase in other financial services.
The rate of growth in new dwelling prices continues to slow down this quarter. This reflects lower new demand as well as material costs easing.
Food prices (+1.6 per cent) also rose this quarter following increases of 1.6 per cent and 0.9 per cent in the March 2023 and December 2022 quarters. This rise was driven by meals out and takeaway foods (+1.7 per cent), fruit and vegetables (+2.4 per cent) and bread and cereal products (+2.9 per cent).
"A shortage of potatoes due to wet weather in key growing regions late last year has continued to place pressure on prices for potato products, including takeaway hot chips, potato crisps and frozen potato products. Vegetable prices rose due to some salad vegetables, like tomatoes and lettuces, coming out of season,” Ms Marquardt said.
Reducing the June quarter rise were price falls for domestic holiday travel and accommodation (-7.2 per cent), electricity (-1.8 per cent), clothing accessories (-2.2 per cent) and automotive fuel (-0.7 per cent).
Annual inflation measures
Annually, the CPI rose 6.0 per cent, with new dwellings (+7.8 per cent), rents (+6.7 per cent) and domestic holiday travel and accommodation (+13.9 per cent) the most significant contributors.
“June quarter’s annual increase of 6.0 per cent is lower than the 7.0 per cent annual rise in the March 2023 quarter. This marks the second consecutive quarter of lower annual inflation, also known as ‘disinflation’, from the peak of 7.8 per cent in the December 2022 quarter,” Ms Marquardt said.
Underlying inflation measures reduce the impact of irregular or temporary price changes in the CPI. Annual trimmed mean inflation was 5.9 per cent, down from 6.6 per cent in the March quarter.
Annual inflation for goods was 5.8 per cent, down from 7.6 per cent in March. Prices for most goods continued to be higher than they were 12 months ago, albeit with smaller annual increases for a range of goods including food, furniture, household appliances and clothing. The exception was automotive fuel which fell 3.6 per cent in the year to June quarter.
Annual inflation for services rose to 6.3 per cent, up from 6.1 per cent in the March quarter and is the highest since 2001.
“This is the first time since September 2021 that services inflation has been higher than goods, highlighting the change from 12 months ago when goods like new dwellings and automotive fuel were driving inflation. Now price increases for a range of services like rents, restaurant meals, child-care and insurance are keeping inflation high,” Ms Marquardt said.
Monthly CPI indicator
Today the ABS also released the monthly CPI indicator for June, which rose 5.4 per cent in the 12 months to June. The monthly CPI indicator has been improved through the introduction of a new monthly Gas series. As a result, there have been small revisions to the monthly CPI indicator. The revised annual rise for May was 5.5 per cent and April was 6.7 per cent.
Price increases for new dwellings (+6.6 per cent) were the most significant contributor to the annual rise, down from 8.3 per cent in May and 9.2 per cent in April. Rents increased to 7.3 per cent in the 12 months to June, up from 6.3 per cent in May.
"The annual increase for the monthly indicator eased in June as automotive fuel prices fell 10.6 per cent, following a fall of 8.0 per cent in May and a rise of 9.5 per cent in April,” Ms Marquardt said.
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