Australia's CPI Surges 1.2% in Q3 2023

The Consumer Price Index (CPI) rose 1.2 per cent in the September 2023 quarter and 5.4 per cent annually, according to the latest data from the Australian Bureau of Statistics (ABS).

Michelle Marquardt, ABS head of prices statistics, said "CPI rose 1.2 per cent in the September quarter, higher than the 0.8 per cent rise in the June 2023 quarter. The rise this quarter however continued to be lower than those seen throughout 2022.

"While prices continued to rise for most goods and services, there were some offsetting falls this quarter including for child care, vegetables, and domestic holiday travel and accommodation."

The most significant contributors to the rise in the September quarter were automotive fuel (+7.2 per cent), rents (+2.2 per cent), new dwellings purchased by owner occupiers (+1.3 per cent) and electricity (+4.2 per cent).

Automotive fuel rose 7.2 per cent after two quarters of price falls. This is the largest quarterly rise in fuel prices since March 2022 and is mainly caused by higher global oil prices.

Rents rose 2.2 per cent, following a 2.5 per cent rise in the June quarter with rental price growth for flats continuing to outpace price growth for houses. The increase in rents this quarter was moderated by changes to Commonwealth Rent Assistance.

From 20 September 2023, the maximum rate available for Rent Assistance increased by 15 per cent on top of the CPI indexation that applies twice a year.

"This is the largest increase in Commonwealth Rent Assistance for 30 years and, while the increase applied for only part of the quarter, it reduced the overall increase in rents by 0.3 percentage points," Ms Marquardt said.

Prices for new dwellings rose 1.3 per cent this quarter, though they continue to ease from rises seen in 2022 due to subdued new demand and easing material costs.

Electricity rose 4.2 per cent reflecting higher wholesale prices being passed on to customers from annual price reviews in July.

"Electricity prices were partially offset by the Energy Bill Relief Fund rebates, which were introduced this quarter. These rebates reduced electricity bills for all households in Brisbane and Perth, and for concession households in the remaining states and territories. Excluding the rebates, electricity prices would have increased 18.6 per cent in the September quarter," Ms Marquardt said.

Food prices (+0.6 per cent) also rose this quarter, with the rise being the softest quarterly rise since September 2021. The rise was driven by meals out and takeaway foods (+2.1 per cent). Partially offsetting the quarterly rise were price falls for fruit and vegetables (-3.7 per cent).

"Fruit and vegetable prices fell this quarter due to favourable growing conditions. Berries, grapes, and salad vegetables such as tomatoes, broccoli and capsicums drove the fall," Ms Marquardt said.

Child care fell 13.2 per cent, and was the largest contributing fall this quarter. Changes to the Child Care Subsidy raised the amount of subsidy received for over a million families and came into effect on 10 July 2023.

"This change reduced out of pocket costs for households, more than offsetting child care fee increases this quarter. Without the changes to the Subsidy, child care would have increased 6.7 per cent," Ms Marquardt said.

Annually, the CPI rose 5.4 per cent, with new dwellings (+5.2 per cent), rents (+7.6 per cent), electricity (+14.5 per cent) and automotive fuel (+7.9 per cent) the most significant contributors.

"September quarter's annual increase of 5.4 per cent is lower than the 6.0 per cent annual rise in the June 2023 quarter. This marks the third quarter in a row of lower annual inflation, down from the peak of 7.8 per cent in the December 2022 quarter," Ms Marquardt said.

Underlying inflation measures reduce the impact of irregular or temporary price changes in the CPI. Annual trimmed mean inflation was 5.2 per cent, down from 5.9 per cent in the June quarter.

Today the ABS also released the monthly CPI indicator for September, which rose 5.6 per cent in the 12 months to September.

"The most significant contributors to the rise were new dwellings (+4.9 per cent), automotive fuel (+19.7 per cent), rents (+7.6 per cent) and tobacco (+7.5 per cent).

"This is the second consecutive rise in the annual movement up from 5.2 per cent in August and 4.9 per cent in July. While many industries price increases are slowing, automotive fuel has had large annual increases in the last two months, which has been driving the movement higher," Ms Marquardt said.