The monthly consumer price index (CPI) indicator rose 2.8 per cent annually in the 12 months to September, according to the latest data from the Australian Bureau of Statistics (ABS).
The annual CPI came in under market consensus of 2.9 per cent, with the main contributors to the faster than expected slowing of annual inflation said to be large falls in electricity and automotive fuel prices.
In the September quarter alone, CPI rose 0.2 per, the lowest outcome since the June 2020 quarter fall which occurred during the COVID-19 outbreak and was driven by free childcare.
“Annually, the September quarter’s rise of 2.8 per cent was down from 3.8 per cent in the June quarter. This is the lowest annual inflation rate since the March 2021 quarter,” said Michelle Marquardt, ABS head of prices statistics.
While prices continued to rise for most goods and services, these increases were offset by large falls for electricity and automotive fuel prices.
Trimmed mean annual inflation, the figure the RBA cares about the most, was 3.5 per cent down from 4.0 per cent in the June quarter. On a quarterly basis, trimmed mean came in at 0.8 per cent.
“The trimmed mean excluded the significant falls in both Electricity and Automotive fuel this quarter, alongside other large price rises and falls. As a result, trimmed mean annual inflation of 3.5 per cent was higher than CPI inflation of 2.8 per cent,” Marquardt said.
Earlier this week, CBA economist Stephen Wu said that in order for the RBA to consider a rate cut this year, trimmed mean inflation would need to come in at 0.7 per cent for the quarter, bringing the annual figure down to 3.4 per cent.
“Our call for a rate cut by year-end is contingent on a trimmed mean CPI inflation outcome that is not higher than 0.7 per cent,” Wu said.
More to come.
