Updated 27 March 2024
The Consumer Price Index (CPI) increased by 0.6% in the December 2023 quarter, lower than market expectations or official forecasts.
Quarterly CPI inflation rose slower in December than September, falling from 1.2% to 0.6% per quarter. Annualised inflation continued to fall to 4.1% p.a.
The monthly CPI indicator sat at 3.4% p.a. in February, maintaining the same rate since December 2023.
Previous official forecasts suggested that CPI would reach 3.2% by the end of 2024, then continue to fall over the coming eighteen months.
The current figure (4.1%) is below that forecast by the RBA and suggests inflation may be falling faster than previous expected.
The Producer Price Index (PPI) – a measure of industrial prices – sat at 4.1% in the December quarter.
Key contributors to rising prices in the December quarter were housing (+1.0%), alcohol & tobacco (+2.8%), and insurance and financial services (+1.7%). Price falls were recorded only for education (-0.1%), transport (-0.2%) and furniture and household equipment (-1%).
Annual goods inflation eased to 3.8% in the December quarter, a decrease from 4.9% in the September quarter. Most goods eased in December 2023 with some goods (clothing, footwear, furniture, and home appliances) seeing deflation over the past year. This reflects easing pressures of global and local supply chains.
Annual inflation for services eased to 4.6% from 5.8% in the December 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
Website: Research and Economics Resource Centre
Email: economics@aigroup.com.au
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