Inflation indicator Slowing, up 6.8% in the year to February 2023

The monthly Consumer Price Index (CPI) indicator rose 6.8 per cent in the year to February 2023, according to the latest data from the Australian Bureau of Statistics (ABS).

Michelle Marquardt, ABS head of prices statistics, said: “This month’s annual increase of 6.8 per cent is lower than the 7.4 per cent annual rise reported in January 2023. This marks the second consecutive month of lower annual inflation, also known as β€˜disinflation’, from the peak of 8.4 per cent in December 2022.”

The most significant contributors to the annual increase seen in February were Housing (+9.9 per cent), Food and non-alcoholic beverages (+8.0 per cent), Transport (+5.6 per cent) and Recreation and culture (+6.4 per cent).

Ms Marquardt said, β€œThe annual increase for the Housing group in February (+9.9 per cent) was lower than January (+10.4 per cent). New dwellings grew 13.0 per cent in the 12 months to February which is the lowest annual growth since February 2022 as price rises for building materials continue to ease. Rent prices rose again due to the tight rental market, maintaining the 4.8 per cent annual growth recorded in January.

β€œThe ABS is continuing to improve the monthly CPI indicator where possible and has added a new monthly series for electricity prices into the indicator. This new series showed that electricity prices rose 17.2 per cent for the year to February.”

Prices for Food and non-alcoholic beverages eased slightly from an annual rise of 8.2 per cent in January to 8.0 per cent in February. Meals out and takeaway food (+7.3 per cent) was the main contributor to the annual increase, followed by Food products not elsewhere classified (n.e.c.) (+11.8 per cent), Bread and cereal products (+12.5 per cent) and Dairy and related products (+14.3 per cent).

Automotive fuel prices rose 5.6 per cent in the year to February, down from January’s annual rise of 7.5 per cent. While fuel prices drove the increase in Transport, annual growth for fuel is the lowest it has been in two years.

Recreation and culture prices moderated this month with annual growth of 6.4 per cent in the year to February, down from 10.2 per cent in January 2023. This was primarily due to Holiday travel and accommodation prices easing from an annual rise of 17.8 per cent in January to 14.9 per cent in February. “Since rising 29.3 per cent in the 12 months to December, price rises for Holiday travel and accommodation have eased to 14.9 per cent in the 12 months to February. The easing in February follows strong demand for domestic and international airfares in December in the lead up to Christmas and prices remained high for accommodation in January during school holidays. ” Ms Marquardt said.

CPI inflation is often impacted by items with volatile price change such as fruit and vegetables, automotive fuel and holiday travel. Ms Marquardt said “It can be helpful to exclude items with volatile price changes from the headline CPI figure to provide a view of underlying inflation. In the case of the monthly CPI indicator, when excluding holiday travel, the annual movement of 6.6 per cent in February is slightly lower compared to 6.8 per cent in January.”

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