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Australia’s inflation has slowed again in the March 2023 quarter, though it continues to remain well above the Reserve Bank of Australia’s target level of 2 to 3 per cent.
The Australian Bureau of Statistics (ABS) released its consumer price index (CPI) on Wednesday, indicating the nation’s inflationary measure had fallen from its December high to sit at 7 per cent for the year to March.
Over the March 2023 quarter, the CPI rose by 1.4 per cent, with ABS Head of Price Statistics Michelle Marquardt highlighting this as the lowest rise since December 2021.
“While prices continued to rise for most goods and services, many of these increases were smaller than they have been in recent quarters,” she said.
The ABS said the main contributors to the quarter’s rise were medical and hospital services (up 4.2 per cent), tertiary education (up 9.7 per cent), as well as gas and other household fuels (up 14.3 per cent).
Another contributor was domestic holiday travel and accommodation, which saw a rise of 4.7 per recent for the quarter.
“Prices for medical and hospital services typically rise in the March quarter as GPs and other health service providers review their consultation fees and the Medicare Safety Net is reset at the start of the calendar year,” Ms Marquardt added.
“This year, some private health insurance premiums also increased in January, adding to the price rise for medical and hospital services.”
Annually, the CPI has risen 7 per cent, with new dwellings (up 12.7 per cent), domestic holiday travel and accommodation (up 25 per cent) and electricity (up 15.5 per cent) the significant contributors.
“The annual increase in March of 7 per cent was lower than the 7.8 per cent rise in December and 7.3 per cent rise in September,” Ms Marquardt said.
“Annual inflation for goods of 7.6 per cent was down from the 9.5 per cent recorded in December due to price falls for goods such as furniture, household appliances and clothing in the March quarter, as well as automotive fuel prices easing in recent quarters.”
Meanwhile, annual inflation for services was 6.1 per cent, up from 5.5 per cent in the last quarter and the highest since 2001.
With annual inflation having eased for a third consecutive month, Aussie consumers are hopeful of another rates pause at the next RBA meeting.
“Trimmed inflation, the RBA’s preferred inflation measure, snapped a seven-quarter rise, and it backs up the hopes that inflation has indeed topped in Australia,” City Index Senior Market Analyst Matt Simpson said.
“The quarterly measure also moved lower for a second consecutive quarter, at its fastest pace since the pandemic.”
Despite the optimism for Australians, Mr Simpson urged that this was not to say the RBA had reached its terminal rate in the cycle.
For now, the RBA looks set to pause rates again at its next meeting, which will take place next week on May 2, 2023.
