Australian CPI Rises 0.6% in Q4 2023, Annual Rate at 4.1%

Highlights:

• The Consumer Price Index (CPI) in Australia rose by 0.6% in the December 2023 quarter, contributing to an annual increase of 4.1%, according to the Australian Bureau of Statistics (ABS).
• While prices continued to rise for most goods and services, the quarterly CPI increase of 0.6% marked the smallest rise since the March 2021 quarter, signaling a moderation in inflationary pressures.
• Housing, alcohol and tobacco, insurance and financial services, and food and non-alcoholic beverages were the primary contributors to the quarterly rise, with notable increases in new dwellings, rental prices, tobacco, and insurance premiums.

The Australian Bureau of Statistics (ABS) has reported a 0.6% increase in the Consumer Price Index (CPI) for the December 2023 quarter, bringing the annual rate to 4.1%. ABS Head of Prices Statistics, Michelle Marquardt, noted that while this is a decline from the peak of 7.8% in December 2022, it represents the smallest quarterly rise since March 2021.

Contributors to Quarterly Rise

Housing (+1.0%), Alcohol and Tobacco (+2.8%), Insurance and Financial Services (+1.7%), and Food and Non-Alcoholic Beverages (+0.5%) were the major contributors to the Q4 increase. Housing saw a boost from new dwellings purchased by owner-occupiers (+1.5%), rents (+0.9%), and utilities (+0.6%). Higher labor and material costs were cited for the 1.5% increase in construction of new dwellings.

Tobacco and Insurance Surge

Tobacco prices surged by 7.0% due to a 5% annual tobacco excise indexation and biannual Average Weekly Ordinary Time Earnings increase. Insurance recorded a robust quarterly movement of 3.8%, primarily driven by higher premiums across motor vehicle, house, and home contents insurance.

Food and Non-Alcoholic Beverages

Food and non-alcoholic beverage prices rose, driven by meals out and takeaway foods (+0.9%), food products not elsewhere classified (+1.9%), and bread and cereal products (+1.9%). However, meat and seafood experienced a decline of 1.2%, attributed to increased supply leading to price drops for lamb and goat (-12.1%) and beef and veal (-1.5%).

Annual Inflation Measures and Monthly CPI Indicator

Annually, the CPI rose by 4.1%, with housing (+6.1%), food and non-alcoholic beverages (+4.5%), and alcohol and tobacco (+6.6%) contributing the most. The annual trimmed mean inflation was 4.2%, down from 5.1% in the previous quarter. The ABS also released the monthly CPI indicator for December, showing a 3.4% rise in the 12 months to December, compared to 4.3% in the 12 months to November.

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