Inflation eases in February

Australian inflation has eased to 6.8% in the year to February, from the 7.4% annual rise reported in January, and the second consecutive month of lower annual inflation from the peak of 8.4% in December, the latest ABS data showed.

The biggest contributors to the 6.8% growth of the monthly Consumer Price Index (CPI) were housing (+9.9%), food and non-alcoholic beverages (+8%), transport (+5.6%), and recreation and culture (+6.4%).

“New dwellings grew 13% in the 12 months to February which is the lowest annual growth since February 2022 as price rises for building materials continue to ease,” said Michelle Marquardt (pictured above), ABS head of prices statistics. “Rent prices rose again due to the tight rental market, maintaining the 4.8% annual growth recorded in January.”

Prices for food and non-alcoholic beverages eased slightly to 8% in February from an annual rise of 8.2% the previous month, with meals out and takeaway food (+7.3%) the main contributor to the annual rise.

ABS added a new monthly series into the indicator – electricity prices, which increased 17.2% for the year to February.

Automotive fuel prices posted their lowest annual growth in two years, rising 5.6% in the year to February, down from January’s annual rise of 7.5%.

Recreation and culture prices moderated in February with a 6.4% annual growth in the year to February, compared to 10.2% in January. This was primarily due to the easing in the prices of holiday travel and accommodation, which saw an annual rise of 17.8% in January to 14.9% in February.

“The easing in February follows strong demand for domestic and international airfares in December in the lead up to Christmas and prices remained high for accommodation in January during school holidays, Marquardt said.

“CPI inflation is often impacted by items with volatile price change such as fruit and vegetables, automotive fuel, and holiday travel,” Marquardt said. “It can be helpful to exclude items with volatile price changes from the headline CPI figure to provide a view of underlying inflation. In the case of the monthly CPI indicator, when excluding holiday travel, the annual movement of 6.6% in February is slightly lower compared to 6.8% in January.”

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