Annual CPI inflation in Australia has dropped into the magical 2-3% band, with the Australian Bureau of Statistics (ABS) Monthly Consumer Price Index Indicator showing it was at 2.7% in the 12 months to August.

For glass-half-full types that means the Reserve Bank Of Australia will surely get out the secateurs and start trimming back on all those nasty rate hikes.

But not so fast.

Glass-half-empty types will see the trend line (3.8% in the 12 months to June, 3.5% in the 12 months to July) and note that despite the drop to 2.7%, all may not be exactly as it seems.

The most significant price rises at the Group level were Housing (+2.6 %), Food and non-alcoholic beverages (+3.4 %), and Alcohol and Tobacco (+6.6 %). Partly offsetting the annual increase was Transport (-1.1 %), the ABS said.

ABS CPI August 2024.

 

Breaking down the Alcohol and Tobacco figure, the former cost 3% more while smokes – on the back of endless government tax hikes – were up 13.4%, despite the proliferation of black market discount cigarettes around the country.

Those struggling with utility bills may doubt it, but electricity prices fell 17.9% in the 12 months to August. It’s the largest fall on record for electricity.

Huh? Well, a month ago the figure, for the 12 months to July, was 5.1%. But in the weeks that followed “the extended and expanded Commonwealth Energy Bill Relief Fund rebates, and the introduction of State government rebates [Queensland, Western Australia and Tasmania] applied from July 2024 for some States”, the ABS said.

“August saw the Commonwealth rebates applied to all States and Territories. These rebates have the effect of reducing electricity costs for households.”

It appears we have landed at a spot where the Labor government stands accused by the opposition of fuelling inflation through spending, but also stands accused by the ABS of lowering inflation through spending.

 

Beer was up 4.5%.

 

Fruit and vegetables were up 9.6% for the year to August, a rise from the year to July (7.5%) and the year to June (3.6%).

Fuel was down 7.6%; furnishings, household equipment and services were up 0.9%, education was up (5.4%) and Insurance and financial services were up 6.2%. 

The annual movement for the monthly CPI indicator excluding volatile items and holiday travel/accommodation was a rise of 3% in the 12 months to August, down from a 3.7% rise in July. Volatile items are fruit, vegetables and automotive fuel.