Updated 12 November 2023
The Consumer Price Index (CPI) increased by 1.2% in the September 2023 quarter, higher than market expectations or official forecasts.
Quarterly CPI inflation rose faster in September than June, jumping from 0.8% to 1.2% per quarter. Annualised inflation continued to fall to 5.4% p.a., following a peak of 7.8% p.a. in December 2022.
The monthly CPI indicator sat at 5.6% p.a. in September, an increase from 5.4% p.a. in August. The monthly indicator is more volatile than the quarterly measure.
Previous official forecasts suggested that CPI would reach 4% by the end of 2023, then continue to fall over the coming eighteen months. However, the September inflation data tracks above that expected by markets, or predicted by the official forecasts.
This September data suggests that high inflation will persist longer than expected.
The Producer Price Index (PPI) – a measure of industrial output prices – sat at 3.8% in the September quarter.
Key contributors to rising prices in the September quarter were automotive fuel (+7.2%), rents (+2.2%), and electricity (+4.2%). Price falls were recorded only for education (-0.4%) and furniture and household equipment (-0.8%).
Annual goods inflation eased to 4.9%, a decrease from 5.8% in the June quarter. While most goods continued to see higher prices, the rate of increase is slowing for non-energy (fuel and electricity) goods. This reflects easing pressures of global and local supply chains.
Annual inflation for services eased to 5.8% from 6.3% in the June quarter. Services inflation is now stronger than for goods.
The Consumer Price Index (CPI) measures changes in the price of a ‘basket’ of goods and services which account for a high proportion of expenditure by metropolitan households. Comprehensive CPI data is published by the Australian Bureau of Statistics quarterly, while a reduced price survey is conducted every month to supplement the quarterly data.
The Quarterly CPI measure is considered the more reliable indicator of inflation, as it measures all consumer prices. The monthly CPI measure is less accurate, but provides more timely insights on price changes that complement the quarterly release.
The Producer Price Index (PPI) measures changes in the price of industrial goods as they are produced. Some products – for example food – are measured in both the CPI and PPI indicators. PPI measures the price obtained by the producer, while CPI measures the price paid by the final consumer.
For more information from the ABS (including advice on using the CPI in contracts) see: https://www.abs.gov.au/statistics/detailed-methodology-information/information-papers/use-price-indexes-contracts
Ai Group Research & Economics Team
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