The Consumer Price Index (CPI) rose 1.9 per cent in the December 2022 quarter and 7.8 per cent annually, according to the latest data from the Australian Bureau of Statistics (ABS).
Michelle Marquardt, ABS head of prices statistics, said “This is the fourth consecutive quarter to show a rise greater than any seen since the introduction of the Goods and Services Tax (GST) in 2000. The increase for the quarter was slightly higher than the quarterly movements for the September and June quarters last year (both 1.8 per cent).”
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The most significant contributors to the rise in the December quarter were Domestic holiday travel and accommodation (+13.3 per cent), Electricity (+8.6 per cent), and International holiday travel and accommodation (+7.6 per cent).
“Strong demand, particularly over the Christmas holiday period, contributed to price rises for domestic holiday travel and international airfares,” Ms Marquardt said.
“The rises seen for domestic and international travel were notably higher than historical December quarter movements.”
“The main factor influencing the rise in electricity prices was the unwinding of the $400 electricity credit offered by the Western Australian Government to all households last quarter. This was partially offset by the ongoing impact of the Queensland Government’s $175 Cost of Living rebate from September 2022, and the introduction of the Tasmanian Government’s $119 Winter Bill Buster electricity discount for concession households.”
Growth in prices for New dwellings (+1.7 per cent) slowed relative to recent quarters (+3.7 per cent in September and +5.6 per cent in June) but remained stronger than historic norms.
“Labour and material costs are driving price growth in this area, with signs of material cost pressures easing,” Ms Marquardt said.
“Slowing demand for new dwelling construction was reflected in a lower quarterly rate of inflation for new dwellings this quarter compared with the past five quarters”.
Food prices continued to rise, driven by Meals out and takeaway foods (+2.1 per cent) as dining establishments pass through rising costs for inputs including ingredients and labour. Vegetables (-10.2 per cent) partially offset the rise, as the effects of unfavourable weather earlier in the year eased.
Annually, the CPI rose 7.8 per cent, with New dwellings (+17.8 per cent), Domestic holiday travel and accommodation (+19.8 per cent) and Automotive fuel (+13.2 per cent) the most significant contributors.
“The annual increase for the CPI is the highest since 1990. Annual inflation for goods such as new dwellings and automotive fuel steadied this quarter, however we saw an uptick in inflation for services such as holidays and restaurant meals,” Ms Marquardt said.
The annual price increase for services (+5.5 per cent) was the highest since 2008, while goods (+9.5 per cent) showed little change from last quarter. The annual price increase of discretionary goods and services (+7.1 per cent) moved closer to that of non-discretionary goods and services (+8.4 per cent) compared with recent quarters.
Underlying inflation measures reduce the impact of irregular or temporary price changes in the CPI. For the third consecutive quarter, annual trimmed mean inflation was the highest since the series commenced in 2003, increasing to 6.9 per cent, up from 6.1 per cent in the September quarter.
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Today the ABS also released the monthly CPI indicator for December. The monthly indicator rose 8.4 per cent in the 12 months to December, following annual rises of 7.3 per cent in November and 6.9 per cent in October.
Ms Marquardt said, “The monthly indicator recorded the largest annual rise in the series in December. The most significant contributors in the 12 months to December were New dwellings, up 16.0 per cent, and Holiday travel and accommodation, up 29.3 per cent. Airfare and accommodation prices rose in response to strong demand over the Christmas holiday period.”
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Consumer Price Index, December 2022
Michelle Marquardt, head of prices at the Australian Bureau of Statistics.
For the December quarter, the CPI rose by 1.9%. That’s four quarters in a row where the CPI has risen by more than it did when the GST came in, in the year 2000.
This quarter we saw higher inflation for services rather than goods, which is a little bit unusual and it’s the first time that we’ve seen that in 2022. The main contributors to the increase in the CPI this quarter were holiday travel and electricity.
So, obviously holiday prices often go up in the December quarter with Christmas being around, this quarter, though, we saw the much higher increases than we generally see in the December quarter.
Electricity rose by nearly 9%. A significant portion of the rise actually occurred in the September quarter, but many of the Governments had a rebate for electricity uses in their states. So now that those rebates are starting to unwind, we’re seeing the electricity price increases flow through.
CPI rose by 7.8% for the year and that’s the highest increase that we’ve seen since 1990. The main contributors to that increase were the price for building a new house, which rose nearly 18%, for holiday travel, which rose nearly 20%, and fuel which rose just over 13%.