The Consumer Price Index further moderated to 4.1 per cent in the year to the December quarter 2023, down from 5.4 per cent in the September quarter.
The monthly CPI indicator moderated further to 3.4 per cent in the 12 months to December 2023, down from 4.3 per cent in November.
These new figures show we are making welcome and encouraging progress in the inflation challenge and that Government policies are helping, but this is not mission accomplished because people are still under pressure.
Headline inflation is now at its the lowest level in two years.
Monthly inflation has a ‘3’ in front of it for the first time since December 2021.
The monthly numbers do bounce around a bit, but it is almost half the 6.1 per cent recorded in May 2022, at the time of the election.
Today’s welcome results are even better than the median market expectation.
Annual inflation moderated 1.3 percentage points in the December quarter 2023 – the fastest pace of moderation since annual inflation peaked at 7.8 per cent in the December quarter 2022.
Inflation increased 0.6 per cent in the quarter, less than a third of the quarterly peak recorded in the March quarter 2022, before the election.
Despite today’s welcome moderation, we know that households are still struggling, so cost of living and the fight against inflation remains the Albanese Government’s highest priority.
The Australian Bureau of Statistics has once again shown that our cost of living plan is helping to directly reduce inflation.
Our cost of living policies took ½ of a percentage point off inflation through the year to December quarter 2023.
In the year to the December quarter 2023, electricity prices rose 6.9 per cent, and would have risen 18.9 per cent without our energy plan.
In the year to the December quarter 2023, rents rose 7.3 per cent, and would have risen 8.9 per cent without the largest increase to rent assistance in 30 years.
In the year to the December quarter 2023, childcare prices fell 7.2 per cent, and would have risen 13.0 per cent without our policy.
Other factors that supported the moderation in annual headline inflation include moderating goods prices, with annual price falls recorded for furnishings, clothing and footwear.
On top of this, we are providing a tax cut for every Australian taxpayer and bigger tax cut for 84 per cent of taxpayers. As the Treasury advice made clear, we are delivering our tax plan in a way that doesn’t add to inflationary pressures.
The Albanese Government is providing cost of living relief that doesn’t add to inflation, budget repair and investing in the capacity of our economy in areas like energy, skills and housing.
Despite the challenges coming at us, the Albanese Government has the right economic plan to ease cost of living pressures on households, navigate the challenges we face and maximise the opportunities of the year ahead.
