Inflation Edges Up in Australia: April CPI Rises 3.6%

Highlights:

• Housing Costs Surge: The Housing category saw a 4.9% annual increase, with rents climbing by 7.5% due to tight rental markets and low vacancy rates.
• Food and Transport Prices Up: Food and non-alcoholic beverages rose by 3.8% annually, driven by unfavorable weather conditions affecting supply. Transport prices increased by 4.2%, with automotive fuel rising 7.4% compared to the previous year.
• Stable Inflation with Volatility: Excluding volatile items like fuel and fruits, the annual CPI rise was steady at 4.1%, indicating higher underlying inflation than the headline CPI.

The Australian Bureau of Statistics (ABS) has reported a 3.6% increase in the Consumer Price Index (CPI) for the year ending April 2024. This marks a slight rise from the 3.5% annual increase observed in March, maintaining relatively stable inflation over the past five months.

Key Contributors to Inflation

The most significant contributors to the annual rise in CPI include Housing, which saw a 4.9% increase. Within this category, rents surged by 7.5% due to tight rental markets and low vacancy rates. New dwelling prices also climbed by 4.9%, as builders passed higher labor and material costs onto consumers. Electricity prices went up by 4.2%, although the Energy Bill Relief Fund rebates have mitigated the impact of these hikes. Without the rebates, electricity prices would have risen by 13.9%.

Food and Transport Costs

Food and non-alcoholic beverages saw an annual increase of 3.8%, driven by unfavorable weather conditions that reduced the supply of fruits and vegetables, such as berries, bananas, lettuce, and broccoli. Transport prices rose by 4.2%, with automotive fuel prices increasing by 7.4% compared to the previous year. Fuel prices alone increased by 2.2% in April, marking the third consecutive monthly rise.

Underlying Inflation

When excluding volatile items like automotive fuel and fruit and vegetables, the annual rise in CPI to April was steady at 4.1%. This indicates that underlying inflation remains higher than the headline CPI.

Stable Yet Rising

Michelle Marquardt, ABS Head of Prices Statistics, noted that while inflation has been stable over recent months, the slight increase in April reflects ongoing pressures in various sectors. The housing sector, food prices, and transportation costs remain the primary drivers of inflation, underscoring the complex economic environment facing Australia.

The ABS's latest data underscores the continuing challenges in managing inflationary pressures, with particular emphasis on the volatile costs of essential commodities and services.

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