Australia’s inflation rate shifted higher than the previous month as widely expected.

The Australian Bureau of Statistics consumer price index for August came in at an annual rate of 5.2 per cent, up from 4.9 per cent in July.

The indicator tracks the cost of buying the same basket of goods and services over time.

The headline result was in line with the 5.2 per cent market consensus forecast.

ABS head of price statistics Michelle Marquardt said inflation was still moderating when volatile items such as fuel, fruit and vegetables, and travel were stripped out.

“When excluding these volatile items from the monthly CPI indicator, the annual rise of 5.5 per cent in August is lower than the annual rise of 5.8 per cent in July,” she said on Wednesday.

Housing, transport, food and insurance were the biggest drivers of the annual increase.

Housing prices continue to moderate, with new dwelling prices recording their weakest annual increase since August 2021 as the cost of building materials eases.

Rent prices kept moving up to reflect a tight market, however, to 7.8 per cent in the 12 months to August from 7.6 per cent through to July.

Higher fuel prices were widely expected to show up in a stronger headline result.

Automotive fuel prices rose 13.9 per cent compared to 12 months ago, up 9.1 per cent in August.

Annual fuel prices had been particularly volatile of late, the ABS noted.

“Price rises this month, combined with base effects, have seen the annual movement for automotive fuel increase 13.9 per cent in August, compared to a fall of 7.6 per cent in July,” Ms Marquardt said.

Electricity prices rose 12.7 per cent and gas prices lifted 12.9 per cent annually to reflect wholesale prices, although the ABS once again said energy bill relief was softening the blow.

Food and non-alcoholic beverages also moderated further, lifting 4.4 per cent in the 12 months to August, down from the 5.6 per cent annual increase in July.

There was a lot of variation across different grocery items though, with fruit and vegetables prices sinking after improved growing conditions but bread, dairy and cereal products picking up.

The monthly inflation result will feed into the Reserve Bank’s interest rate decision, with more interest rate hikes on the cards if the data suggests price pressures are proving persistent.

More emphasis is usually put in the quarterly numbers, however, which are due late next month – after the September cash rate call.

 

Poppy Johnston
(Australian Associated Press)