Australian Bureau of Statistics (ABS) data confirms that the consumer price index (CPI) has dropped to a 13-month low of 5.6%. This is the smallest increase in just over a year and is down from the 6.8% reported in April 2023. It is also lower than the market expectation of 6.1%.
This retreat in the inflation rate is raising expectations that the Reserve Bank (RBA) will likely pause increases to the key interest rate in July and that the worst of inflation may be at an end. According to the head of prices statistics at ABS, Michelle Marquardt, despite prices on most goods and services having continued to rise, the increments have been smaller in recent months.
Among the top contributors to the monthly CPI include housing costs which went up by 8.4%, compared to 8.9% in April and rent by 6.3% compared to 6.1% in April. Bread and cereals also rose by 12.8%, while food and alcoholic beverages also increased by 7.9%. Automotive fuel helped offset this effect by registering a decline of 8%.
With the Reserve Bank having hiked interest rates by 400 basis points since May 2022, but still determined to get the inflation rate within its 2-3% target range by 2025, it is still uncertain if these movements will be reason enough for them to pause further increments. The country’s inflation rate peaked at the end of last year.
The RBA is expected to factor in these new statistics, alongside additional data on retail sales and job vacancies before their next board meeting. Retail turnover has been reported to have risen by a seasonally adjusted 0.7%, with the biggest contributor being sales at restaurants, cafes, and takeaways which increased by 1.4%.
Job vacancies also fell by 2% from February figures, with employers offering 431,600 positions to be filled last month. With 515,900 unemployed workers in the economy, this vacancy rate means there are about four vacant positions available for every five unemployed persons. The private sector registered the biggest drop in job openings from 394,000 to 385,000.
ABS head of labour statistics, Bjorn Jarvis, said that although job vacancies had dropped over the past year, the numbers were still considerably higher than those reported in February 2020, around the start of the pandemic. He added that more than one in five businesses were looking to hire a new employee since May 2021, indicating a tight labour market impacting a broad range of businesses.
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