CPI slows in June quarter

CPI inflation has slowed in the June 2023 quarter with a rise of 0.8 per cent, the lowest quarterly rise since September 2021.

During the June quarter, CPI rose by 0.8 per cent and by 6 per cent annually, according to the Australian Bureau of Statistics (ABS).

Michelle Marquardt, ABS head of prices statistics, said: “CPI inflation slowed in the June quarter with the quarterly rise being the lowest since September 2021.

"While prices continued to rise for most goods and services, there were some offsetting price falls this quarter including for domestic holiday travel and accommodation and automotive fuels.”

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The most significant contributors to the rise in the June quarter were rents (+2.5 per cent), international holiday travel and accommodation (+6.2 per cent), other financial services (+2.5 per cent) and new dwellings purchased by owner-occupiers (+1 per cent). 

“Rents recorded the strongest quarterly rise since 1988, reflecting low vacancy rates amid a tight rental market. Rental price growth for flats continued to outpace the growth for houses.

“Higher demand for international travel, particularly to Europe with the start of the European summer peak season, led to price increases. These were partially offset by price falls for travel to South-East Asia and New Zealand as prices dipped following increases during the Christmas and school holiday periods in December and January.”

Russel Chesler, head of investments at VanEck, said: "Consumers shouldn’t expect an overnight retreat in the cost of goods and services. Today’s stubbornly high CPI data is testament to the difficulties in bringing inflation down in the short term. CPI is unlikely to retreat to within the target band of 2-3 per cent this year.

“Rebounding housing activity and prices, robust retail sales and near full employment do not point to an economy on the brink of a significant slowdown. The RBA is clearly not done with its rate hike regime.”

“The case for raising the cash rate in August remains based on the strength of the labour market, still stubborn inflation and further upside risks to wages.

“The RBA is clinging to the hope that the labour market will begin to soften this year as higher interest rates start to impact demand for goods and services and immigration increases labour supply. This should in turn cool wage and inflation pressures. However, Australia’s unemployment rate of 3.5% for June remains at historically low levels.”

The next statistics will be given on 25 October for the September quarter.