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Inflation higher than expected over September quarter

James Mitchell
01 November 2021 1 minute readShare
Inflation

The consumer price index (CPI) rose 0.8% in the September 2021 quarter, according to the latest data from the Australian Bureau of Statistics (ABS).

Head of prices statistics at the ABS, Michelle Marquardt said the most significant price rises in the September quarter were new dwellings (+3.3%) and automotive fuel (+7.1%).

“Construction input costs such as timber increased due to supply disruptions and shortages. Combined with high levels of building activity, this saw price increases passed through to consumers,” said Ms Marquardt.

“Rising fuel prices also contributed to the September quarter CPI increase, with the CPI’s automotive fuel series reaching the highest level in its half-century history.”

Rents also rose (+0.2%), with rises in most cities partially offset by falls in Sydney and Melbourne.

“A two-speed rental economy remained evident in the September quarter,” said Ms Marquardt. “Low vacancy rates drove price rises in Brisbane, Adelaide, Perth, Hobart, Darwin and Canberra, while high vacancy rates, particularly for inner cities properties, saw rental prices fall in Sydney and Melbourne on both a quarterly and annual basis.”

Global supply disruptions resulted in price rises for some items including furniture (+3.8%), motor vehicles (+1.4%) and audiovisual equipment (+1.8%).

The most significant price falls were fruit (-8.3%) due to favourable growing conditions for berries, avocados and citrus fruits, and reduced demand from the food-service industry, reflecting lockdowns in Sydney and Melbourne. Clothing prices also fell (-5.5%) as retailers looked to move excess winter stock as sales fell due to lockdowns, as reflected in retail trade data.

Annually the CPI rose 3.0%. Ms Marquardt said: “A key contributor to this increase was fuel prices, which have risen 36% from the lows seen in mid-2020.”

Underlying inflation measures reduce the impact of irregular or temporary price changes in the CPI, such as the significant fuel price increases this quarter or the impact of free childcare in 2020. These measures recorded their strongest annual increase since 2015. Trimmed mean inflation increased to 2.1%, up from 1.6% in the June quarter.

Inflation higher than expected over September quarter
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James Mitchell

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