🗞️Inflation Rate Stabilizes, but Budget Aims to Keep Cost of Living Down
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The Consumer Price Index (CPI) increased by 1.0% in the quarter ending March 20, 24 and by 3.6% yearly, as per the most recent data released by the Australian Bureau of Statistics (ABS).
"The CPI rose 1.0 per cent in the March quarter, higher than the 0.6% rise in the December 2023 quarter," stated Michelle Marquardt, ABS head of prices statistics.
The CPI increased 3.6% annually to the March 2024 quarter. Annual CPI inflation decreased from 4.1% in the previous quarter and has since dropped from its peak of 7.8% in December 2022, despite prices for the majority of goods and services continuing to rise."
Quarterly CPI inflation
Education (+5.9 percent), Health (+2.8 percent), Housing (+0.7 percent), and Food and non-alcoholic beverages (+0.9 percent) were the main drivers of the March quarter increase.
The beginning of the calendar year saw an increase in education fees that was the largest quarterly increase since 2012. With yearly CPI indexation applied to tertiary education fees, tertiary education increased by 6.5%. Due to fee increases at the beginning of the school year, secondary education increased by 6.1%, while preschool and primary education increased by 4.3%.
As general practitioners and other health care providers review their consultation fees, prices for hospital and medical services usually increase in the March quarter (+2.3%). At the beginning of each year, the Medicare and Pharmaceutical Benefit Scheme Safety Nett thresholds are also reset, which means that fewer people are eligible for discounted rates on out-of-hospital services and prescription drugs.
Owner-occupied new homes (+1.1%) and rents (+2.1%) were the main drivers of the housing market's quarterly increase.
"In keeping with the low vacancy rates in all of the capital cities, rental prices increased 2.1% for the quarter. According to Ms. Marquardt, rent increases are happening at the quickest rate in fifteen years.
Prices for building new homes increased this quarter due to increased labour and material costs. The 1.5% increase in the quarter ending in December 2023 is marginally less than the 1.1% increase this time around.
Prices for food and non-alcoholic beverages increased this quarter, with non-alcoholic beverages accounting for the majority of the increase (+3.4%), followed by fruit and vegetables (+2.5%), and food products not otherwise classified (+1.9%). The quarterly increase was somewhat offset by a decrease in meat and seafood prices of 0.7%.
This quarter, prices for meat and seafood decreased due to a combination of increased supply and discounting on lamb and goat as well as beef and veal. Discounting fish and other seafood as well as other meats, according to Ms. Marquardt, also contributed to the decline.
Measures of annual inflation
The CPI increased 3.6% annually, with the largest contributions coming from housing (+4.9%), food and non-alcoholic beverages (+3.8%), and alcohol and tobacco (+6.3%).
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Measures of underlying inflation lessen the effect of sporadic or transient price fluctuations in the CPI. The annual trimmed mean inflation rate decreased to 4.2% in the December quarter from 4.2% in the previous quarter.
"After peaking at 6.8% in the December 2022 quarter, this is the fifth consecutive quarter of lower annual trimmed mean inflation," Ms. Marquardt stated.
Since November of last year, the RBA cash rate has been held at 4.35 percent while decision-makers determine whether Australia will stay on the narrow path to a soft landing and raise inflation back to the target range of 2 to 3 percent.
Meanwhile, Jim Chalmers, the treasurer, stated that although inflation has "almost halved" since the government took office, it is "still too high."
The goal of the upcoming budget is to reduce, not increase, the pressures associated with the cost of living.
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