The Australian Bureau of Statistics (ABS) reported a 2.1% annual rise in the consumer price index (CPI) for October, maintaining the lowest rate of inflation since July 2021.
“Annual inflation was steady at 2.1% in October,” said Michelle Marquardt (pictured above left), ABS head of prices statistics.
Key contributors to the rise included food and non-alcoholic beverages (+3.3%), recreation and culture (+4.3%), and alcohol and tobacco (+6.0%). However, dramatic declines in electricity (-35.6%) and automotive fuel (-11.5%) played a significant role in easing inflation.
Electricity prices fell by an unprecedented 35.6% annually, driven by Commonwealth and state government rebates.
“These rebates continue to reduce household out-of-pocket expenses for electricity,” Marquardt said.
Similarly, automotive fuel saw an 11.5% price drop over the past year, reflecting consecutive months of price decreases.
Despite the overall CPI easing, the trimmed mean inflation – considered a core measure – rose to 3.5% in October, up from 3.2% the previous month. This highlights continued pressure in some sectors.
Housing costs saw modest annual growth of 0.2%, driven by offsetting trends: rising rents (+6.7%) and falling electricity costs. Adjustments to Commonwealth Rent Assistance (CRA) moderated the impact of rent increases.
Errors in the ABS’s earlier estimates of childcare reforms led to revisions this month. The corrected data reduced the Childcare index by 5.8%, marginally lowering the overall CPI and trimmed mean measures.
RateCity’s Laine Gordon (pictured above centre) observed that while the 2.1% CPI figure is positive, it may not be sufficient to prompt immediate rate cuts.
“The Reserve Bank board has made it clear it will need to see more than one good quarterly inflation data before it’s willing to put rate cuts back on the agenda,” Gordon said.
Peter Esho (pictured above right), founder of Esho Capital, offered a more optimistic view, citing government measures as a key factor in inflation control.
“The door is now opening for the RBA to cut in February/March,” Esho said.
With household spending under pressure, rising mortgage arrears, and anticipated slower retail sales during the holiday season, signs of economic fatigue are emerging. Analysts agree that the Reserve Bank’s response will likely hinge on inflation and consumer spending data in early 2025.
For now, borrowers are encouraged to negotiate or refinance home loans, as competitive rates below 6% are available from several lenders.
See the ABS media release here. Read the Monthly Consumer Price Index Indicator, October 2024 for more details.
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