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Annual inflation falls to its lowest rate since January 2022

Inflation Drop

New data from the Australian Bureau of Statistics (ABS) shows annual inflation dropped to 4.3 per cent in the 12 months to November — its lowest level since January 2022 — down from 4.9 per cent the previous month. 

However, Treasurer Jim Chalmers warned “the fight is far from over” with cost‑of‑living pressures still the “defining challenge in our economy.”

Commenting on the monthly Consumer Price Index (CPI), ABS head of price statistics Michelle Marquardt said the most significant contributors to the November annual increase were housing (up 6.6 per cent), food and non-alcoholic beverages (up 4.6 per cent), insurance and financial services (up 8.8 per cent) and alcohol and tobacco (up 6.4 per cent).

Excluding items with volatile price changes like automotive fuel, fruit and vegetables, and holiday travel, which often impact CPI inflation, the annual rise in November was 4.8 per cent, lower than the annual rise of 5.1 per cent in October.

Marquardt said annual inflation for automotive fuel has fallen from 19.7 per cent in September 2023 to 2.3 per cent in November, which she added has been a “significant contributor to the lower annual rise in the monthly CPI indicator over the past two months.”

Automotive fuel prices rose 2.3 per cent in the 12 months to November, which was down from the annual increase of 8.6 per cent in October, meaning automotive fuel prices fell 0.5 per cent in monthly terms as crude oil prices reached a five-month low. 

Elsewhere, housing rose 6.6 per cent in the 12 months to November, up from the 6.1 per cent annual increase in October, while new dwelling prices rose 5.5 per cent over the year due to higher labour and material costs. However, government policies have helped push down prices.

“The increase in Commonwealth Rent Assistance has reduced out-of-pocket rent costs for eligible tenants since its introduction on 20th September. Excluding these changes to rent assistance, rents would have increased 8.8 per cent over the year to November,” said Marquardt.

The result was similar when it came to electricity prices, which rose 10.7 per cent in the 12 months to November due to annual price reviews in July, but consumers benefited from the introduction of the Energy Bill Relief Fund rebates for eligible households at around the same time.

“Electricity prices have risen 8.8 per cent since June. Excluding the rebates, electricity prices would have increased 19.0 per cent over this period,” Marquardt confirmed. 

Food and non-alcoholic beverages rose 4.6 per cent in the 12 months to November, down from the 5.3 per cent annual increase in October, with Marquardt concluding, “annual inflation for food and non-alcoholic beverages remains elevated for most categories.” 

Exceptions were predominantly fresh food such as meat and seafood and fruit and vegetables, which recorded lower inflation because of favourable weather conditions increasing supply.

In an official statement, Chalmers said, “We are making welcome and encouraging progress in this inflation challenge, and the Government’s policies are helping, but the fight is far from over.

He added, “Inflation is still higher than we would like, but monthly inflation is around half of its peak and much lower than the 6.1 per cent we inherited at the time of the election.

“The monthly data can jump around which is why the quarterly figures are the official measure of inflation, but the continuing moderation in today’s figures is encouraging.

“Despite this welcome moderation, cost‑of‑living pressures are still the defining challenge in our economy so the fight against inflation remains the Albanese Government’s highest priority.

“We understand many Australians are under pressure and there is still more to do – and global volatility and uncertainty is another reminder that we cannot be complacent.”

However, shadow treasurer Angus Taylor fired back, saying the government has been “slow to act.”

Speaking to Sky News Australia, Taylor said, “We have the most persistent inflation of any advanced country in the world according to The Economist.

“The longer we take to sort this out, the more prices go up in the meantime.”

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