Inflation eases to 6 per cent in June quarter

Inflation has continued to ease over the June quarter, with annual price growth moderating to the lowest level since September 2021 as goods such as clothing and furniture continue to become cheaper.
Official data published on Wednesday by the Australian Bureau of Statistics revealed the annual pace of price growth has eased to 6 per cent – down from 7 per cent in the preceding March quarter.
The increase undershot market and Reserve Bank expectations, which will now raise the likelihood of another interest rate pause in August.
The Consumer Price Index rose 0.8 per cent over the June quarter, down from the 1.4 per cent rise in the three months to March.
ABS’ head of price statistics Michelle Marquardt said prices continued to rise for most goods and services, though there were some offsetting falls such as lower prices for domestic holiday travel and automotive fuel.
“Inflation slowed in the June quarter, with the quarterly rise being the lowest since September 2021,” she said in a statement on Wednesday.
“This marks the second consecutive quarter of lower annual inflation, also known as ‘disinflation’, from the peak of 7.8 per cent in the December 2022 quarter.”
Treasurer Jim Chalmers described Wednesday’s figures as “welcome” but said inflation remained Australia’s No.1 challenge.
“When you compare the quarterly peak, in March last year, we have gone from 2.1 per cent before the change of government to 0.8 per cent in the new numbers,” he said.
“Even with today’s numbers showing a welcome fall, … we know the people are still doing it tough.”
Shadow treasurer Angus Taylor said the government was focused on the symptoms of inflation, rather than the source.
“Right now, that real pain is being felt,” he said.
“We see an economy where GDP data is going backwards not forwards. This is part of the challenge that Australians are facing right now.
Where inflation is still hitting
A big contributor to June quarter inflation was a huge rise in rents, which were up 2.5 per cent – the strongest quarterly increase since 1988.
A combination of near record low vacancy rates and surging demand for housing post-COVID are combining to push prices up, the ABS said.
International holiday travel and accomodation prices also rose 6.2 per cent amid higher demand, particularly for European holidays.
“These were partially offset by price falls for travel to South-East Asia and New Zealand as prices dipped following increases during the Christmas and school holiday periods in December and January,” Ms Marquardt said.
Food prices also rose 1.6 per cent in the quarter, which is far less than the increases households were suffering through late last year.
Takeaway food prices rose 1.7 per cent, while prices for fruit and veg went up 2.4 per cent. Bread and cereal products inflated by 2.9 per cent.
Ms Maequardt said potato products were under particular price pressure.
“A shortage of potatoes due to wet weather in key growing regions late last year has continued to place pressure on prices for potato products, including takeaway hot chips, potato crisps and frozen potato products,” she said.
“Vegetable prices rose due to some salad vegetables, like tomatoes and lettuces, coming out of season.”
Helping to offset higher prices for international travel, domestic tourism prices fell a sizeable 7.2 per cent after a surge in the March quarter.
Electricity prices, meanwhile, fell 1.8 per cent after rocketing upwards in the three months to March.
Wednesday’s inflation data undershot market forecasts which predicted rising rents and other services prices would deliver a bigger number.
That points towards the possibility of another pause in interest rates in August, though underlying inflation – a measure that strips volatility out of the inflation figures and is watched closely by the RBA – is still high.
Trimmed mean inflation was 5.9 per cent in the June quarter, which was down 6.6 per cent from the preceding period but remains well above the RBA’s 2-3 per cent target band.