ABS data released today shows that underlying inflation has moderated, which indicates the momentum of inflationary pressures is downwards, and that headline inflation is in line with the RBA’s forecasts.
Headline CPI increased 3.8 per cent through the year to the June quarter 2024.
While headline inflation is proving sticky and stubborn, and is more persistent than we would like, it is less than half its peak and much lower than the 6.1 per cent we inherited at the time of the election.
Headline inflation increased by 1.0 per cent in the June quarter 2024, less than half of the quarterly peak recorded in the March quarter 2022, before the election.
Trimmed mean inflation, which strips out more volatile components, was 3.9 per cent in the year to the June quarter 2024. This is much lower than the 5.0 per cent we inherited, and the sixth consecutive quarter of lower annual trimmed mean inflation.
³Ô¹ÏÍøÕ¾ grown inflation, which can be measured by non‑tradable inflation, was 0.7 per cent in the quarter, this is around half the rate of the March quarter 2024.
Tradable inflation grew 1.7 per cent in the quarter which was faster than non‑tradable inflation.
The monthly inflation indicator moderated to 3.8 per cent in the 12 months to June 2024, down from 4.0 per cent in May 2024. Monthly CPI remains well below its peak, and much lower than the 6.1 per cent at the time of the election.
While a tick‑up in headline inflation is unwelcome, it is unsurprising given what’s happening around the world. Inflation is lingering for longer than we had hoped across the globe, and Australia’s experience is no different.
Global shipping, geopolitical tensions and spikes in oil prices are adding volatility and uncertainty to the outlook for inflation across the globe.
We saw headline and core inflation tick up earlier in the year in the United States, Canada and the Euro area before heading back down.
Our headline inflation peaked lower and later than many comparable economies and our core inflation has moderated faster than the US, Canada and Euro area.
We’ve seen around the world that inflation can zig and zag on the way down – and, because Australia’s inflation peaked lower and later than in many countries, we’re seeing that trend here now.
We know that the inflation fight is far from over – that’s why the Albanese Labor Government’s priority is responsible economic management.
Today’s result is not driven by the Budget. Our Budget strategy is helping the fight against inflation, not hampering it.
Fiscal policy isn’t a primary determinant of prices in our economy but our Budget’s helping to take some of the edge off inflation.
We have delivered the first back‑to‑back surpluses in almost two decades, which the RBA Governor has said are helping in the fight against inflation.
We’re also on track for a larger than forecast surplus, which could be the largest back‑to‑back surpluses on record.
We know that demand is weak in our economy because people are under pressure, which is why our economic plan is all about fighting inflation without crunching the economy.
Our cost‑of‑living relief is easing pressure on Australians, and ABS analysis today shows it’s directly taking pressure off inflation.
The data shows our policies took ½ of a percentage point off inflation in the year to the June quarter 2024.
In the year to the June quarter 2024, electricity prices rose 6.0 per cent, and would have risen 14.6 per cent without our energy rebates.
In the year to the June quarter 2024, rents rose 7.3 per cent – without the largest increase to Rent Assistance in 30 years, they would have risen 9.1 per cent.
In the year to the June quarter 2024, childcare prices fell 5.7 per cent, but would have risen 14.9 per cent without our policy.
We know that people are under pressure – our primary focus is getting on top of this sticky and stubborn inflation through responsible cost‑of‑living relief and responsible budget repair.
