Inflation cools ahead of rates decision
The consumer price index dropped to 4.9 per cent for October as the Reserve Bank prepares to meet next week to decide whether to jack up interest rates yet again.
On an annualised basis, inflation rose by 4.9 per cent as of October 2023 driven by increasing housing prices and the rising cost of food, non-alcoholic beverages and transport.
This figure was slightly lower than September’s consumer price index (CPI) rise of 5.6 per cent and well below the peak of 8.4 per cent in December 2022.
Acting ABS head of prices statistics Leigh Merrington said volatile price changes to key essentials impacted the inflation figures in October.
“CPI inflation is often impacted by items with volatile price changes like Automotive fuel, Fruit and vegetables, and Holiday travel. It can be helpful to exclude these items from the headline CPI to provide a view of underlying inflation,” Merrington said.
“When excluding these volatile items from the monthly CPI indicator, the annual rise in October is 5.1 per cent, lower than the annual rise of 5.5 per cent in September.”
Housing prices were up 6.1 per cent – lower than 7.2 per cent seen in September and new dwelling prices rose 4.7 per cent: the lowest annual rise since August 2021 due to easing prices for building materials.
Rent prices rose 6.6 per cent in the 12 months to October 2023 which the Australian Bureau of Statistics (ABS) said was due to low vacancy rates and a tight rental market.
“The annual increase in Rents is lower than the rise of 7.6 per cent in September largely due to the increase in Commonwealth Rent Assistance that took effect from 20 September 2023 and reduces rents for eligible tenants,” Merrington said.
“Excluding the changes to rent assistance, Rents would have increased 8.3 per cent in the 12 months to October.”
The ABS said electricity prices rose 10.1 per cent over the past year and automotive fuel prices were up 8.6 per cent.
“The reinstatement of the full fuel excise tax to 46 cents per litre on 30 September 2022 contributed to the annual increase to September 2023 but not to October 2023,” Merrington said.
“This, combined with a monthly fall of 2.9 per cent, has reduced the annual rise for Automotive fuel.”
The data comes as the Reserve Bank board is set to meet next Tuesday to determine the national interest rate which earlier this month rose to 4.35 per cent.
The move led by newly-appointed RBA governor Michele Bullock added nearly $80 per month to repayments for a $500,000 mortgage, which now costs more than $12,000 extra a year to service than before the increases.
The last rate hike prior to November’s was in June 2023 – at the time the 12th since May 2022.
