Australia’s Consumer Price Index (CPI) has shown a rise of 0.8% in the June quarter of 2023, indicating a moderate increase in household inflation. Over the twelve months leading to the June 2023 quarter, the CPI has surged by 6.0%.
The most significant price increases were observed in various categories of household expenditure, including:
- Rents: Rental prices experienced a notable rise of 2.5%, marking a substantial increase for tenants in the country.
- International holiday travel and accommodation: This category saw a surge of 6.2% in prices, reflecting increased travel demand and costs.
- Other financial services: Prices for other financial services, such as banking and insurance, rose by 2.5% during the quarter.
- New dwelling purchase by owner-occupiers: Prices for new dwellings purchased by owner-occupiers increased by 1.0%.
Inflation in Services and Goods
The annual inflation rate for services saw its highest increase since the introduction of the Goods and Services Tax (GST) over 20 years ago. Services inflation reached 6.3% due to rising costs for utilities, rents, and insurance premiums, among other factors. Meanwhile, goods inflation slowed down to 5.8% after two years of strong price increases, with prices for food, furniture, appliances, and clothing registering lower growth rates.
Notable Inflation Trends
New dwelling prices experienced a slowdown in their rate of growth. After reaching a peak of 20.7% in the September 2022 quarter, annual inflation for new dwelling purchases by owner-occupiers fell to 7.8% in the June 2023 quarter. The moderation in price growth is attributed to lower demand, improved supply of materials, and easing material costs.
Furthermore, rental prices saw their largest annual rise since 2009, increasing by 6.7%. This surge is a result of a tight rental market across the country and low vacancy rates, causing rents to rise significantly.
Review of Seasonally Adjusted Series
In the June quarter of 2023, a review of the seasonally adjusted series was conducted, resulting in no changes to existing seasonal adjustment settings. Out of 87 series, 55 remained seasonally adjusted.
Partial Update to CPI Weights
To ensure that the CPI basket reflects contemporary household spending patterns, a partial update to the CPI weights will be implemented in the September 2023 quarter. This update is due to the continued increase in Australians holidaying overseas, which will see the weight for International holiday travel increase, with the other components adjusted to offset the increase. The updated weights will be published on August 30, 2023.
Overall, the CPI data suggests moderate inflationary pressure in Australia, with some sectors experiencing significant price increases, while others show signs of easing inflation.