The monthly CPI indicator rose 2.7 per cent in the 12 months to August, according to the latest data from the Australian Bureau of Statistics (ABS).
Down from 3.5 per cent in July, the reading is the lowest since August 2021.
As expected by economists and flagged by RBA governor Michele Bullock on 24 September, the consumer price print showed the effects of government cost-of-living relief measures.
Mainly, the print reflected a record 17.9 per cent annual drop in the price of electricity on the back of the combined impact of Commonwealth Energy Bill Relief Fund rebates and state government rebates in Queensland, Western Australia and Tasmania.
“The falls in electricity and fuel had a significant impact on the annual CPI measure this month. When prices for some items move by large amounts, measures of underlying inflation like the CPI excluding automotive fuel, fruit and vegetables and holiday travel, and the trimmed mean can provide additional insights into how inflation is trending,” Michelle Marquardt, ABS head of prices statistics, said.
CPI inflation excluding volatile items and holiday travel was 3.0 per cent in August, down from 3.7 per cent in July, while annual trimmed mean inflation, which excluded both the falls in automotive fuel and electricity, alongside other large price rises and falls, was 3.4 per cent in August, down from 3.8 per cent in July.
“Both measures of annual underlying inflation in August are the lowest they have been for 2.5 years,” Marquardt said.
On 24 September, the RBA held rates at 4.35 per cent for the seventh consecutive meeting as it believes the outlook is “highly uncertain”.
Commenting on the numbers, Anneke Thompson, chief economist at CreditorWatch, said: “Monthly CPI data measuring the price movements of goods and services over August 2024 revealed a large downward shift in inflation. This was expected given both state and federal government electricity subsidies were reflected in the cost of electricity, and there was also a large expected fall in the price of automotive fuel.
“Overall, this result provides no surprises – on the upside or downside – to the RBA, and is unlikely to shift its thinking around the timing of the first cut to the cash rate. Given household consumption is likely to stay very subdued for the remainder of the year, it is likely that trimmed mean monthly inflation will continue its slow trend down over the next few months.”
