Australian prices rose 6.1% in the June quarter, the fastest annual pace since 2001 as consumers forked out more for everything from fuel to food.
Transport costs alone increased 13.1% as the price of fuel rose to record levels for the fourth quarter in a row, with Russia’s invasion of Ukraine in February the latest propellent. The cost of new houses also rose 9% from a year earlier.
Data released on Wednesday by the Australian Bureau of Statistics also showed the measure most closely watched by the Reserve Bank accelerated too. The trimmed mean gauge of inflation rose to 4.9% in the April-June period from 3.7% in previous three months, stoking expectations of another rate hike when the RBA board meets next Tuesday.
“There are no two ways about it – inflation is red hot in Australia right now, as it is in many parts of the world, and the RBA will respond by raising the cash rate again at the August board meeting next week,” said Gareth Aird, head of economics at CBA.
“Our central scenario for the RBA to raise the cash rate by 50 basis points [to 1.85%] at the August board meeting is unchanged,” he said.
Economists had predicted the headline consumer price index figure for the June quarter to come in at 6.3%. The 6.1% pace was the most since the June quarter of 2001. In the March quarter, the CPI was 5.1%.
Inflation picked up to 6.1% in the June quarter, the most since the end of 1990. pic.twitter.com/6ysLtMzWe0
— Peter Hannam (@p_hannam) July 27, 2022
“Inflation will get worse before it gets better,” the treasurer, Jim Chalmers, told a media conference, adding the government assumes inflation will peak “towards the end of this year”.
Prices of non-discretionary goods and services rose 7.6%, implying the full impact of price rises was greater for essential purchases consumers. Discretionary costs rose 4%.
“Annual trimmed mean inflation was the highest since the series commenced in 2003 and annual goods inflation was the highest since 1987, as the impacts of supply disruptions, rising shipping costs and other global and domestic inflationary factors flowed through the economy,” said Michelle Marquardt, head of prices statistics at the ABS.
On a quarterly basis, CPI rose 1.8% compared with 2.1% during the January-March period – both were the highest rates since the GST was introduced in 2000.
Fruit and vegetable prices rose almost 6% in the June quarter alone, prompted in part by shortages caused by heavy rains in areas of the east coast.
The cost of automotive fuel reached record levels for a fourth consecutive quarter, the ABS notes. pic.twitter.com/mtaMDr8yBb
— Peter Hannam (@p_hannam) July 27, 2022
Rising costs of living were among the reasons voters dumped the Morrison government at the 21 May elections.
While the Albanese government can rightly claim most of the June quarter took place before it was sworn in, it will likely come under increasing pressure to ease strains on household and business budgets. So far, it is refusing to extend the six-month 22.1 cent a litre halving of the fuel excise introduced in the Coalition’s final budget beyond its September expiry.
Chalmers on Wednesday reiterated his intention to let the excise cut expire, saying he didn’t want “to give people false hope”. The temporary cut cost the budget about $3bn.
The trimmed mean inflation figure came in at 4.9% for the June quarter, or more than economists were tipping. The RBA aims for that to be in the 2-3% range over time. pic.twitter.com/422FuoAfLL
— Peter Hannam (@p_hannam) July 27, 2022
Australia’s inflation rate has tended to lag most of its trading partners. New Zealand clocked up a 7.3% pace in the June quarter – also a 32-year high – while the UK and the US posted 9%-plus rates of inflation in June, and the Eurozone notched an annual rate 8.6% for the same month.
