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Inflation edges higher, driven by soaring fuel prices

Adam Zuchetti
Adam Zuchetti
31 July 2019 1 minute readShare
Filling up at the petrol pump

Australia’s official rate of inflation — the Consumer Price Index — has risen by 0.6 of a percentage point last quarter, according to the ABS, helping to lift the yearly rate of inflation from its low of 1.3 per cent.

The Bureau of Statistics released its official CPI figures on Wednesday (31 July), showing a 0.6 of a percentage point increase for the June quarter.

That was a substantial increase on the March quarter, where CPI did not record any movement at all.

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A stronger June result helped push up the annual inflation rate to 1.6 per cent, up from its previous level of 1.3 per cent, but still below the Reserve Bank’s official target band of 2 per cent to 3 per cent.

ABS chief economist Bruce Hockman said that rather than a more sustained increase in prices, much of the June quarter’s rise was the result of higher fuel prices — a much more volatile component of the index.

 

“Automotive fuel prices rose [by] 10.2 per cent in the June quarter 2019. This rise had a significant impact on the CPI, contributing half of the 0.6 [of a percentage point] rise this quarter,” he said.

“Automotive fuel prices returned to levels recorded in late 2018, after falling [by] 8.7 per cent in the March quarter 2019.”

Other sectors to see price increases were international holiday travel and accommodation (up by 2.7 per cent), medical and hospital services (up by 2.6 per cent) and tobacco (up by 2.4 per cent).

Other goods saw prices ease, led by fruit and vegetables (down by 2.8 per cent) and electricity (down by 1.7 per cent). Compared to its international equivalent, domestic holiday travel and accommodation saw prices dip by 1.5 per cent in the quarter.

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Mr Hockman said that inflation “continues to be subdued”, which he attributed to “falls in a number of administered prices”.

Interestingly, they include the much-maligned costs of utilities and childcare — down by 0.2 of a percentage point and 7.9 per cent, respectively, over the past year. Childcare costs, Mr Hockman said, have eased as a result of the government’s Child Care Subsidy package released in July 2018.

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Inflation edges higher, driven by soaring fuel prices
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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