Inflation rises higher than expected
For the third consecutive month, the monthly consumer price index rose, with power and housing prices contributing to the increase.
The monthly consumer price index rose to 4 per cent in the 12 months to May 2024 – up 0.4 percentage points on the previous month – per new Australian Bureau of Statistics (ABS) data.
The rising cost of housing (up 5.2 per cent), food (up 3.3 per cent), transport (up 4.9 per cent) and alcohol (up 6.7 per cent) were the main contributors to rising inflation which has ticked upwards for three months in a row as of May 2024.
Electricity prices also rose by 6.5 per cent in the 12 months to May, up from 4.2 per cent in April.
The rate of inflation is slightly higher than what economists were expecting, and will inform the Reserve Bank’s decision on whether to change interest rates.
While the cash rate stayed unchanged at 4.35 per cent again at the June meeting, where it has been since November, the RBA described the economic outlook as highly uncertain.
The central bank’s wariness was in part attributed to stronger-than-thought consumption and a minor uptick in inflation.
ABS head of price statistics Michelle Marquardt said out-of-pocket costs for electricity are increasing as the Energy Bill Relief Fund rebates are being used up by eligible Australian households.
“The introduction of the Energy Bill Relief Fund rebates from July 2023 has mostly offset electricity price rises from annual price reviews in the same month,” Marquardt said.
“Excluding the rebates, electricity prices would have risen 14.5 per cent in the 12 months to May 2024.”
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Fuel saw a price fall in May, down 5.1 per cent in the 12 months. This is the first monthly fall since January, which the ABS said reflected lower wholesale fuel prices.
“Despite the monthly fall in May, automotive fuel prices rose 9.3 per cent annually up from 7.4 per cent in April,” Marquardt said.
“The annual increase was largely due to base effects where the fall in May this year was smaller compared to the fall in May 2023.”
– With AAP
