Australia's annual Consumer Price Index (CPI) rose by 2.1% in the year to October, maintaining its level from September, indicating the lowest inflation rate since July 2021, as reported by the Australian Bureau of Statistics (ABS) on Wednesday. Food and non-alcoholic beverages significantly contributed to this rise, increasing by 3.3%.
Moreover, recreation and culture experienced a 4.3% hike, alongside alcohol and tobacco, which saw a notable climb of 6%. CommBank Research analysts highlighted that this data illustrates reinforcing signs of disinflation as we approach late 2024. They pinpointed easing pressures in crucial sectors, particularly noting the deceleration in new dwelling price growth, the primary component of the CPI basket. Largely counterbalancing these increases were appreciable declines in electricity prices, which plummeted by 35.6%, and automotive fuel prices that dropped by 11.5%. Core inflation measures exhibited a slight uptick, with the trimmed mean rising to 3.5% from 3.2%, while the CPI excluding volatile items experienced a decrease to 2.4%, down from 2.7%. CommBank Research remarked, "We now anticipate trimmed mean CPI growth of 0.6% quarter-on-quarter for Q4 2024, revised down from our earlier forecast of 0.7%." They further indicated that core inflation is expected to fall short of the Reserve Bank of Australia's (RBA) projections. Housing costs experienced modest growth of 0.2%, driven by rising rents and new dwelling prices.
Rent prices surged by 6.7%, although this was partially mitigated by a 10% rise in Commonwealth Rent Assistance, which effectively reduced the rent increase to the same 6.7% for the period. New dwelling prices surged by 4.2%. The ABS made corrections to previous estimates regarding childcare costs, lowering the CPI by 0.05 percentage points and the annual trimmed mean by 0.02 percentage points. Looking forward, CommBank Research anticipates that the RBA will opt to maintain the cash rate in its upcoming December meeting, likely awaiting the full Q4 CPI figures, scheduled for release on January 29, before making any revisions to its forecasts..