Updated 6 November 2024
The Consumer Price Index (CPI) rose to 2.8% p.a in the September 2024 quarter, this is the first time inflation has returned to the RBA’s target since the pandemic.
Quarterly consumer price inflation rose by 0.2% in the September quarter 2024, resulting in an annualised inflation rate of 2.8%. This marks the lowest annual inflation rate observed since the first quarter of 2021.
Official forecasts suggested that CPI would reach 2.5% in June 2025 before rising back to 3.7% at the end of 2025, then continue to fall throughout 2026.
The current annual figure (2.8%) together with its quarterly figure suggest inflation is falling faster than previous projections. This is the first quarter that inflation has fallen back within the RBA’s target range of 2-3%.
The Trimmed Mean Inflation (TMI), which offers a better reading of underlying inflation by excluding volatile items, was 3.5% in September, indicating that underlying inflation still is sticky and remains above the target band of 2-3%.
The Producer Price Index (PPI) – a measure of industrial prices – is now on the easing trend and slowed from 4.8% to 3.9% in the September quarter.
Key contributors to rising prices in the June quarter were recreation and culture (+1.3 %), alcohol and tobacco group (+1.3 %), insurance and financial services group (+1.2%), and furnishing, household equipment and services (+0.9%). Price increases for other goods and services were largely offset by a 17.3% decrease in electricity costs, mainly due to the 2024-25 Commonwealth Energy Bill Relief Fund rebates available nationwide.
Annual goods inflation slowed to 1.4% in the September quarter, a 1.8% decrease from the June quarter. Prices for most goods increased in September 2024. Recreation and culture saw notable increases due to higher demand for international travel and accommodation, especially in Europe during peak travel season. The school holidays also pushed up domestic accommodation prices.
Annual inflation for goods was 1.4% while services inflation remains elevated (4.6% p.a.) in September quarter 2024. Inflation has been higher for services than goods for the past year.
The Consumer Price Index (CPI) measures changes in the price of a ‘basket’ of goods and services which account for a high proportion of expenditure by metropolitan households. Comprehensive CPI data is published by the Australian Bureau of Statistics quarterly, while a reduced price survey is conducted every month to supplement the quarterly data.
The Quarterly CPI measure is considered the more reliable indicator of inflation, as it measures all consumer prices. The monthly CPI measure is less accurate, but provides more timely insights on price changes that complement the quarterly release.
The Producer Price Index (PPI) measures changes in the price of industrial goods as they are produced. Some products – for example food – are measured in both the CPI and PPI indicators. PPI measures the price obtained by the producer, while CPI measures the price paid by the final consumer.
For more information from the ABS (including advice on using the CPI in contracts) see: https://www.abs.gov.au/statistics/detailed-methodology-information/information-papers/use-price-indexes-contracts
Ai Group Research & Economics Team
Website: Research and Economics Resource Centre
Email: economics@aigroup.com.au
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