Inflation creeps up again
Australia recorded a slight uptick in the annual rate of inflation for the second month in a row, with prices rising for housing, food, alcohol and transport.
New Australian Bureau of Statistics (ABS) data showed the annual rate of inflation increased to 3.6 per cent in April, up by 0.1 per centage points on the prior month.
The monthly consumer price index (CPI) – a measure of inflation – was above consensus forecasts after economists anticipated the monthly consumer price gauge would moderate to 3.4 per cent.
It marks the second month in a row that the annual rate of inflation has increased, following a three-month period from December 2023 to February 2024 when the rate of inflation remained stable at 3.4 per cent.
The ABS said the most significant contributors to the April annual rise were prices for housing (up 4.9 per cent), food and non-alcoholic beverages (up 3.8 per cent), alcohol and tobacco (up 6.5 per cent) and transport (up 4.2 per cent).
When excluding items with volatile price changes like fuel, fruit and vegetables and holiday travel, the ABS said the annual rise to April was steady at 4.1 per cent.
You might like
“It can be helpful to exclude these items from the headline CPI to provide a view of underlying inflation,” ABS head of price statistics Michelle Marquardt said.
“When excluding these volatile items…the annual rise to April was steady at 4.1 per cent. Annual inflation excluding volatile items remains higher than for the monthly CPI indicator.”
Though housing prices remain a major contributor to inflation, the item’s impact on overall inflation was down from 5.2 per cent in March.
The ABS noted rent prices increased by 7.5 per cent in the 12 months to April, which it said reflected a tight rental market and low vacancy rates across the country.
Stay informed, daily
New dwelling prices also rose by 4.9 per cent in the 12 months as builders passed on higher costs for labour and materials onto the consumer.
Electricity prices continue to grow, rising by 4.2 per cent in the 12 months to April.
“The introduction of the Energy Bill Relief Fund rebates from July 2023 has mostly offset electricity prices from annual price reviews in July 2023 due to higher wholesale prices,” the ABS said.
Marquardt said electricity prices would have risen by 13.9 per cent if not for the rebates.
Fruit and vegetable prices recorded their largest annual rise since April 2023 in this latest update, which the ABS said reflected “unfavourable weather conditions leading to a reduced supply of berries, bananas and vegetables, such as lettuce and broccoli”.
The cost of health and wellbeing is on the rise too, with prices for health services up 6.1 per cent in the 12 months – well up on the 4.1 per cent increase recorded in the 12 months to March 2024.
“Medical and hospital services is the main contributor to the rise, with a 7.3 per cent annual rise in April following a 4.6 per cent rise in March,” the ABS said.
“The added strength this month reflects a rise in health insurance premiums which increased on 1 April.”
The news comes ahead of the Reserve Bank’s next decision on interest rates. The RBA board has repeatedly said it is looking for a slowing of inflation before it makes a call on dropping interest rates, meaning mortgage relief could still be some time off.
The RBA left interest rates unchanged for yet another month earlier in May, noting high levels of inflation were falling “more gradually than expected”.
