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Inflation continues to rise for September quarter

Inflation continues to rise for September quarter

The Client Worth Index (CPI) rose 1.2% within the September 2023 quarter and 5.4% yearly, in accordance with the most recent information from the Australian Bureau of Statistics (ABS).

On a month-to-month foundation, the CPI indicator rose 5.6% within the 12 months to September.

All eyes flip to the Reserve Financial institution to see whether or not this improve will imply one other price improve earlier than the top of the yr.

Inflation continues to rise

Michelle Marquardt (pictured above), ABS head of costs statistics, mentioned newest CPI figures rose 1.2% within the September quarter, greater than the 0.8% rise within the June 2023 quarter.

“The rise this quarter nonetheless continued to be decrease than these seen all through 2022,” Marquardt mentioned.

“Whereas costs continued to rise for many items and providers, there have been some offsetting falls this quarter together with for childcare, greens, and home vacation journey and lodging.”

Quarterly CPI inflation

Essentially the most important contributors to the rise within the September quarter have been automotive gasoline (+7.2%), rents (+2.2%), new dwellings bought by proprietor occupiers (+1.3%), and electrical energy (+4.2%).

Automotive gasoline rose 7.2% after two quarters of worth falls. That is the most important quarterly rise in gasoline costs since March 2022 and is principally attributable to greater international oil costs.

Rents rose 2.2%, following a 2.5% rise within the June quarter with rental worth development for residences persevering with to outpace worth development for homes. The rise in rents this quarter was moderated by adjustments to Commonwealth Lease Help.

From 20 September 2023, the utmost price out there for Lease Help elevated by 15% on prime of the CPI indexation that applies twice a yr.

“That is the most important improve in Commonwealth Lease Help for 30 years and, whereas the rise utilized for less than a part of the quarter, it diminished the general improve in rents by 0.3 share factors,” Ms Marquardt mentioned.

Costs for brand spanking new dwellings rose 1.3% this quarter, although they proceed to ease from rises seen in 2022 as a result of subdued new demand and easing materials prices.

Electrical energy rose 4.2% reflecting greater wholesale costs being handed on to prospects from annual worth critiques in July.

“Electrical energy costs have been partially offset by the Vitality Invoice Reduction Fund rebates, which have been launched this quarter. These rebates diminished electrical energy payments for all households in Brisbane and Perth, and for concession households within the remaining states and territories. Excluding the rebates, electrical energy costs would have elevated 18.6% within the September quarter,” Ms Marquardt mentioned.

Meals costs (+0.6%) additionally rose this quarter, with the rise being the softest quarterly rise since September 2021. The rise was pushed by meals out and takeaway meals (+2.1%). Partially offsetting the quarterly rise have been worth falls for fruit and greens (-3.7%).

“Fruit and vegetable costs fell this quarter as a result of beneficial rising circumstances. Berries, grapes, and salad greens corresponding to tomatoes, broccoli and capsicums drove the autumn,” Ms Marquardt mentioned.

Youngster care fell 13.2%, and was the most important contributing fall this quarter. Modifications to the Youngster Care Subsidy raised the quantity of subsidy acquired for over one million households and got here into impact on 10 July 2023.

“This transformation diminished out of pocket prices for households, greater than offsetting youngster care payment will increase this quarter. With out the adjustments to the Subsidy, youngster care would have elevated 6.7%,” Marquardt mentioned.

Annual inflation measures

Yearly, the CPI rose 5.4%, with new dwellings (+5.2%), rents (+7.6%), electrical energy (+14.5%), and automotive gasoline (+7.9%) essentially the most important contributors.

“September quarter’s annual improve of 5.4% is decrease than the 6.0% annual rise within the June 2023 quarter. This marks the third quarter in a row of decrease annual inflation, down from the height of seven.8% within the December 2022 quarter,” Ms Marquardt mentioned.

Underlying inflation measures cut back the influence of irregular or short-term worth adjustments within the CPI. Annual trimmed imply inflation was 5.2%, down from 5.9% within the June quarter.

Month-to-month CPI indicator

At this time the ABS additionally launched the month-to-month CPI indicator for September, which rose 5.6% within the 12 months to September.

“Essentially the most important contributors to the rise have been new dwellings (+4.9%), automotive gasoline (+19.7%), rents (+7.6%) and tobacco (+7.5%).

“That is the second consecutive rise within the annual motion up from 5.2% August and 4.9% in July. Whereas many industries worth will increase are slowing, automotive gasoline has had massive annual will increase within the final two months, which has been driving the motion greater,” Marquardt mentioned.

What is going to the RBA do?

With inflation rising, all eyes now flip to what the Reserve Financial institution board will do on the primary Tuesday of November.

NAB is the one main financial institution that also predicts one other price hike earlier than the top of the yr. Nevertheless, it’s more and more probably that NAB’s forecast is right.

Two-thirds of consultants surveyed by Finder on September 1 mentioned that the money price had peaked within the present price rise cycle.

Nevertheless, by the top of September, virtually half of consultants anticipated one other price hike this yr.

Essentially the most damning proof comes from the October 3 RBA board assembly minutes, which cited issues about rising stress within the Center East fuelling inflation. The minutes mentioned that the RBA has a low tolerance for inflation returning to focus on extra slowly than at the moment anticipated.

Concerningly, the almost 20% leap in gasoline over the month could not bode nicely for these hoping for an additional pause.

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