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The monthly Consumer Price Index (CPI) indicator rose 3.4 per cent in the 12 months to January 2024, according to the latest data from the Australian Bureau of Statistics (ABS).

Michelle Marquardt, ABS head of prices statistics, said: “Annual inflation for the monthly CPI indicator was steady at 3.4 per cent and remains the lowest annual inflation since November 2021.”

The most significant contributors to the January annual increase were Housing (+4.6 per cent), Food and non-alcoholic beverages (+4.4 per cent), Alcohol and tobacco (+6.7 per cent) and Insurance and financial services (+8.2 per cent). Partially offsetting the annual increase is Recreation and culture (-1.7 per cent) primarily due to Holiday travel and accommodation (-7.1 per cent).

“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.

“When excluding these volatile items from the monthly CPI indicator, the annual rise in January was 4.1 per cent, down from 4.2 per cent in December. Annual inflation when excluding volatile items has been declining since the peak of 7.2 per cent in December 2022,” Ms Marquardt said.

*Volatile items are Fruit and vegetables and Automotive fuel

Housing rose 4.6 per cent in the 12 months to January, down from 5.2 per cent in December. New dwelling prices rose 4.8 per cent over the year with builders passing through higher costs for labour and materials.

Rent prices rose 7.4 per cent in the 12 months to January, reflecting a tight rental market and low vacancy rates across the country.

Annual electricity prices rose 0.8 per cent in the 12 months to January 2024. The introduction of the Energy Bill Relief Fund rebates for eligible households from July 2023 has mostly offset electricity price rises from annual price reviews in July due to increases in wholesale prices.

“Excluding the rebates, Electricity prices would have increased 15.3 per cent in the 12 months to January 2024,” Ms Marquardt said.

“Annual inflation for Food and non-alcoholic beverages increased to 4.4 per cent in January, up from 4.0 per cent in December. Annual inflation remains elevated for food, apart from fresh food categories. Meat and seafood and Fruit and vegetables, for example, saw lower or negative annual inflation,” Ms Marquardt said.

Holiday travel and accommodation prices fell 7.1 per cent in the 12 months to January, following a 9.1 per cent annual fall in December. This was driven by falls in both domestic and international holiday travel.