The latest report by the Australian Bureau of Statistics has found that the consumer price index (CPI) rose by 1.9% for the December quarter of 2022 and a total of 7.8% for the year. This is the fourth consecutive quarter during which the index has risen at a level higher than anything recorded before the introduction of the goods and services tax (GST). It is also the highest annual increase for the CPI since 1990.
The report shows that the biggest contributors to the December quarter’s increase were domestic holiday travel and accommodation which rose by 13.3%. Electricity also rose by a substantial 8.6%, while international holiday travel and accommodation increased by 7.6%. According to the head of prices statistics at ABS, Michelle Marquardt, high demand, especially over the Christmas holiday period, was a major contributor to the increase in domestic holiday travel prices and international airfares. She noted that the increase in pricing was higher than historical December quarter movements.
The rise in electricity pricing was mostly attributed to the winding down of the $400 electricity credit being offered to all households by the Western Australian government. This was however partially offset by a $175 cost of living rebate from the Queensland government and a newly introduced $119 Winter Bill Buster electricity discount offered to concession households by the Tasmanian government.
There was also a slowdown in the growth of prices for new dwellings that rose by just 1.7% in the December quarter. This pricing had risen at a faster rate in previous quarters including 3.7% for the September quarter and 5.6% in the June quarter. Marquardt attributed this decline to the rise in labour and material costs. She also said that there was slowing demand for new dwelling construction.
Food prices also appear to have risen as the price of meals and takeaway foods rose by 2.1% for the December quarter and 9.2% for the year. this increase was linked to the rising cost of ingredients and labour that restaurants were having to struggle with. This has however been partially offset by a fall in prices for vegetables that declined by 10.2%. this reduction was attributed to the more favourable weather conditions.
The figures are higher than were expected and are likely to increase the chances that the Reserve Bank of Australia (RBA) will increase interest rates when it meets again in February. PM Anthony Albanese is hopeful that inflation will peak within the first quarter of the year and has said that the economy has very strong fundamentals. He has however held back on confirming whether or not the country will avoid slipping into a recession.
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