25 October 2023

Annual inflation continues to moderate

Today’s September quarter Consumer Price Index shows annual inflation moderated to 5.4 per cent from six per cent in the previous quarter in the face of intensifying global volatility.

The world is inflicting price pressures on Australians and we are doing our best to ease them.

While inflation is moderating overall, it is proving to be more persistent around the world and more persistent here in Australia.

The result is broadly in line with market expectations and consistent with Treasury forecasts.

Today’s data proves our 10-point cost-of-living plan is working as intended. The ABS said that without the government policies for childcare, electricity and rent, CPI would have been around half a percentage point higher through the year.

Inflation was 1.2 per cent in the September quarter, below the quarterly peak of 2.1 per cent that was recorded in the March quarter just before the election.

Production cuts and disruptions in global oil markets are a key driver of inflation in the global economy and here at home, with Australians facing higher fuel prices at the bowser.

This was evident in the ABS monthly indicator which was 5.6 per cent in the 12 months to September, compared to the increase of 5.2 in the year to August.

Petrol prices increased 7.2 per cent in the quarter, contributing a quarter of a percentage point to quarterly inflation.

We shouldn’t be surprised to see some volatility in inflation figures going forward, particularly given the global uncertainty from the conflict in the Middle East and the war in Ukraine.

We understand that inflation and higher interest rates that are already in the system are biting households hard and we’re acting to make things a little easier.

The Albanese Government’s primary focus is rolling out $23 billion in cost-of-living assistance that’s been especially designed not to add to inflation.

Electricity prices increased 4.2 per cent in the September quarter. Without the energy rebates, the ABS estimates prices would have increased 18.6 per cent.

Child care decreased 13.2 per cent in the September quarter. Without our changes to child care subsidies introduced on 1 July, the ABS estimates prices would have increased 6.7 per cent.

Rents increased 2.2 per cent in the September quarter, without the largest increase in Commonwealth Rent Assistance in 30 years, rents would have increased 2.5 per cent. We will see the full impact of the higher CRA flow through in the next quarter.

Next month, we are tripling bulk billing incentives to support 11.6 million eligible Australians, including children, pensioners and other concession cardholders, to access a GP with no out-of-pocket costs.

The Albanese Government’s combination of budget restraint, investments to lift the capacity of the economy, and targeted cost-of-living relief is helping ease annual inflation in our economy.

We have the right economic plan to steer the economy through these difficult times, stare down the inflation challenge and deliver a better future for more Australians.