Price declines in electricity and fuel drive annual CPI lower
Australia’s consumer price index (CPI) rose by 0.2% in the December 2024 quarter and 2.4% annually, marking a continued decline in inflation, the latest figures from the Australian Bureau of Statistics (ABS) have shown.
Michelle Marquardt (pictured above), ABS head of prices statistics, noted that the December quarter’s increase mirrored the 0.2% rise in the September 2024 quarter.
“These rises were the lowest recorded since the June 2020 quarter when the CPI fell during the COVID-19 outbreak when childcare was free,” she said.
Annual inflation of 2.4% was down from 2.8% in the previous quarter. The trimmed mean inflation, which excludes volatile price movements, was 3.2% for the year, down from 3.6% in the September quarter.
“The trimmed mean excluded price falls in both electricity and automotive fuel this quarter, alongside other large price rises and falls,” Marquardt said. “As a result, trimmed mean annual inflation of 3.2% was higher than CPI inflation of 2.4%.”
Key drivers of the quarterly CPI rise included recreation and culture (+1.5%) and alcohol and tobacco (+2.4%). These increases were offset by declines in Housing (-0.7%) and transport (-0.7%).
Domestic holiday travel and accommodation costs surged by 5.7% due to high demand during the school holidays. Meanwhile, a 5.8% increase in tobacco prices was attributed to the 5% annual tobacco excise rise and biannual indexation adjustments from September 2024.
Electricity prices dropped 9.9% in the December quarter following a 17.3% fall in the September quarter, largely due to government energy rebates. Without these rebates, electricity prices would have risen by 0.2%.
New dwelling prices also declined (-0.2%), marking the first quarterly drop since June 2021, as builders offered incentives to attract buyers amid weak demand. Automotive fuel prices fell 2% in the quarter, reflecting lower global oil prices.
Annual goods inflation slowed to 0.8%, down from 1.4% in the previous quarter, driven by declines in electricity and fuel prices. Services inflation eased slightly to 4.3% from 4.6%, with rent, medical services, and insurance contributing to ongoing price pressures.
Non-discretionary inflation fell to 1.8% annually, while discretionary inflation rose to 3.2%. Non-discretionary inflation was lower than discretionary inflation for the first time in nearly four years due to lower prices for fuel, electricity, food, and new dwellings.
The ABS also reported that the monthly CPI indicator rose 2.5% in the year to December, up from 2.3% in November. The main contributors were food and non-alcoholic beverages (+2.7%), alcohol and tobacco (+5.8%), and housing (+1.5%).
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