Latest inflation data masks the soaring cost of energy, with many businesses reportedly at “breaking point” by being forced to absorb double-digit price gains.
Headline inflation came in at a modest 0.6 per cent for the September quarter and 1.8 per cent for the year.
This was below market expectations, which had forecast a surge in inflation due to rapidly escalating energy prices.
Energy prices did indeed rise strongly, according to the Australian Bureau of Statistics (ABS), with electricity up 8.9 per cent in the quarter. However, the overall figure was offset by a significant fall in the cost of vegetables (down 10.9 per cent), as well as lower fuel and telecommunications (down 2.3 per cent and 1.5 per cent respectively).
“The figures confirm businesses are being hit hard,” said Adam Carr, chief economist at the Australian Chamber of Commerce and Industry (ACCI).
“Electricity prices rose 8.9 per last quarter. They’re up nearly 20 per cent since mid last year. Many businesses have seen their bills double in the past year.”
Mr Carr said many businesses were “at breaking point” as low overall inflation meant they could not pass higher energy costs onto consumers.
“Seventy per cent of Australia’s electricity is used by business,” he said.
“If Australia’s energy crisis is not solved soon, we are going to see job losses and business closures.”
Earlier this month, a separate survey of close to the 1,300 businesses found 70 per cent were slashing investment plans in order to cope with excessive energy price increases.