Headline CPI rose 0.2% in September quarter
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The news: The consumer price index rose 0.2% in the September quarter in headline terms, or 2.8% on an annual basis. The market was expecting around 2.9% on an annualised basis, down from 3.8% in the previous quarter.
The numbers: The critical trimmed mean annual inflation measure was 3.5%, or 0.8% for the quarter.
The main contributors putting upwards pressure on inflation were price rises for recreation and culture, up 1.3%, food and non-alcoholic drinks, up 0.6%, and alcohol and tobacco, up 1.3%.
The predominant reason for the decline was a fall in electricity prices, due to government rebates, and automotive fuel.
Annual goods inflation more than halved, down to 1.4% from 3.2% in the June quarter. However, annual services inflation was slightly higher than the June quarter, at 4.6% compared to 4.5%, driven by higher prices for rent, insurance, health and education.
The context: The Reserve Bank meets next week to decide on interest rates for the penultimate meeting of the year. Most economists expect rates to remain on hold until 2025.
Headline inflation was widely expected to fall within the RBA's 2% to 3% target band for the first time this cycle, driven down by federal government energy subsidies and cost of living relief.
However, the RBA has been focused on the underlying, or trimmed mean, measure. The RBA has also been concerned about sticky services inflation, which continued in this data.
What they said: "The September quarter’s rise of 0.2% is the lowest outcome since the June 2020 quarter fall which occurred during the COVID-19 outbreak and was driven by free childcare," said Michelle Marquardt, head of prices statistics at the Australian Bureau of Statistics.
"Annually, the September quarter’s rise of 2.8% was down from 3.8% in the June quarter. This is the lowest annual inflation rate since the March 2021 quarter," she said.
"The 2024-25 Commonwealth Energy Bill Relief Fund rebates in all states and territories and state government electricity rebates in Queensland, Western Australia and Tasmania led to a large fall in electricity prices this quarter. Without the rebates, electricity prices would have increased 0.7% this quarter."
The source: ABS media release
