Monthly inflation has slowed to its lowest level in three years on the back of falling fuel prices and the federal government’s energy bill relief.
New data from the Australian Bureau of Statistics (ABS) showed headline inflation fell from 3.5 per cent in July to 2.7 per cent in August – the lowest figure since August 2021.
But while that figure is now sitting within the RBA’s target range of 2-3 per cent, it’s unlikely to spark an interest rate cut, with the central bank set to look through the impact of the first instalment of $3.5 billion in energy rebates.
READ MORE: Macquarie Bank hit with record $5 million fine over energy market breaches
“Those $300 annual rebates for households, they’re showing up the headline figure,” Nine Finance Editor Chris Kohler said.
“It’s being taken with a bit of a grain of salt. What people are really looking at is the core inflation figure.”
Even so, it’s still largely positive news.
That CPI excluding volatile items (which the ABS considers to be fruit and vegetables and fuel) and holiday costs snuck into the Reserve Bank’s target range at 3 per cent.
Core inflation – the central bank’s preferred measure of the trimmed mean – is outside the band at 3.4 per cent, but nonetheless slowed from 3.8 per cent in July.
“The falls in electricity and fuel had a significant impact on the annual CPI measure this month,” ABS head of prices statistics Michelle Marquardt said.
“When prices for some items move by large amounts, measures of underlying inflation like the CPI excluding automotive fuel, fruit and vegetables and holiday travel, and the trimmed mean can provide additional insights into how inflation is trending.
“Both measures of annual underlying inflation in August are the lowest they have been for 2.5 years.”
More to come.
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