Australias CPI Shows Modest 4.3% Annual Rise in November 2023

Highlights:

• Australia's Consumer Price Index (CPI) indicates a modest 4.3% annual rise in November 2023, marking the smallest increase since January 2022.
• Housing, food, and financial services lead the contributors to the November annual increase, with housing witnessing a 6.6% surge and rent prices rising by 7.1%.
• Electricity prices experience a significant 10.7% increase in the 12 months to November, driven by wholesale price hikes, while automotive fuel prices see a decline, rising only 2.3% annually.

Consumer Price Index Records Smallest Increase Since January 2022

In the latest data release by the Australian Bureau of Statistics (ABS), the monthly Consumer Price Index (CPI) indicator revealed a 4.3% annual rise in the 12 months leading up to November 2023. ABS Head of Prices Statistics, Michelle Marquardt, highlighted that this increase is a slight downturn from the 4.9% rise observed in October, marking the smallest annual increase since January 2022.

Housing, Food, and Financial Services Lead Contributors

The primary contributors to the November annual increase were Housing (6.6%), Food and non-alcoholic beverages (4.6%), Insurance and financial services (8.8%), and Alcohol and tobacco (6.4%). Notably, the CPI inflation, influenced by volatile items such as automotive fuel, Fruit and vegetables, and Holiday travel, demonstrated a 4.8% annual rise in November when excluding these elements.

Housing Sector and Rent Prices Surge

The Housing sector saw a 6.6% increase in the 12 months to November, with new dwelling prices rising 5.5% due to heightened labor and material costs. Rent prices also surged by 7.1%, reflecting a tight rental market and low vacancy rates. The recent increase in Commonwealth Rent Assistance alleviated out-of-pocket rent costs for eligible tenants, preventing a potential 8.8% increase.

Electricity Prices and Food Costs on the Rise

Electricity prices rose by 10.7% in the 12 months to November, driven by wholesale price hikes from annual reviews in July 2023. Despite the introduction of the Energy Bill Relief Fund rebates, electricity prices increased by 8.8% since June 2023, showcasing a potential 19.0% increase without the rebates. Meanwhile, Food and non-alcoholic beverages increased by 4.6%, showing a slight decline from the 5.3% annual rise in October.

Automotive Fuel Prices Experience Decline

Automotive fuel prices rose by a modest 2.3% in the 12 months to November, a significant drop from the 8.6% increase observed in October. Monthly terms saw a 0.5% decrease as crude oil prices softened, reaching a five-month low. Marquardt noted that the fall in annual inflation for Automotive fuel contributed to the lower annual rise in the monthly CPI indicator over the past two months.

In summary, Australia's CPI data for November 2023 reflects a nuanced economic landscape, showcasing sector-specific trends and providing insights into the country's inflation dynamics.

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