January inflation sat at 7.4 per cent higher than the previous year, with fiscal pressures easing off slightly since December’s high.

“This month’s annual increase of 7.4 per cent is lower than the 8.4 per cent rise for the year to December 2022,” Michelle Marquardt, ABS Head of Prices Statistics, said.

“It is, however, the second highest annual increase since the start of the monthly CPI indicator series in September 2018, signifying ongoing high inflation.”

Driving the overall figures are housing inflation, which sits at 9.8 per cent, the ‘recreation and culture’ category, at 10.2 per cent, and food and non-alcoholic beverages, ay 8.2 per cent.

The recreation and culture sector was primarily due to travel and accommodation rising 17.8 per cent for the year to January — albeit, down from 29.3 per cent in December.

The ABS notes the impact of items with volatile price change such as fruit and vegetables, automotive fuel, and holiday travel.

“It can be helpful to exclude items with volatile price change from the headline CPI figure to provide a view of underlying inflation,” Marquardt said.

“In the case of the monthly CPI indicator, when excluding holiday travel, the annual movement was a rise of 6.7 per cent in January, compared to 7.4 per cent in December.”

Treasurer Jim Chalmers said today he is hopeful that inflation peaked in December.

“Inflation remains the number one challenge for the economy, and while inflation is higher than we’d like, we’re cautiously hopeful that it has peaked and this is also the review of the Reserve Bank,” he said.

“The national accounts measure of consumer prices rose by 1.5 per cent in the December quarter.

“We also got the monthly inflation read for January today. There’s a lot of volatility in the monthly inflation read, we need to be cautious and careful about interpreting the monthly outcome.

“What it shows is that inflation in January is around 7.4 per cent compared to 8.4 per cent in the monthly read for December of last year.

“This is more evidence that inflation is likely to have peaked in our economy and the worst when it comes to inflation is behind us.”