It feels like Australians have been haemorrhaging cash in recent months, so the announcement from the Australian Bureau of Statistics on Wednesday that inflation has eased slightly would surprise many people.
Grocery bills should be going down with the cost of food and non-alcoholic beverages easing in October, ABS data shows.
The headline consumer price index for October was 6.9 per cent, down from 7.3 per cent in September.
But the rosy outlook could be due to how the ABS calculates CPI, with ABS head of prices statistics Michelle Marquardt warning that a scheduled change to reflect shifting spending patterns was partially responsible for the unexpected monthly decline.
Under the previous system, the headline inflation reading would have been 7.1 per cent rather than 6.9 per cent, Ms Marquardt said.
St George economist Jameson Coombs said the monthly slip did not necessarily indicate a changing trend.
“The data, although softer, suggests that the inflation pulse remains strong and that domestic drivers of inflation remain acute,” Mr Coombs said.
But there might be some hope for cash-strapped Australians feeling the pain of rising prices.
Food and beverages
Food and non-alcoholic beverage price rises fell from 9.6 per cent in September to 8.9 per cent in October.
A fall in fruit and vegetable prices was the key contributor to the decline, with the annual price increase for that segment dropping from 17.4 to 9.4 per cent (month on month).
Improved growing conditions resulted in more supply of fruit and vegetables, leading to lower prices.
Although that may sound good for household budgets, it’s worth noting that fruit and vegetable prices are up 9.4 per cent from a year ago. And we haven’t felt the full effects of recent flooding on the east coast, so price increases could be on the way.
Holiday, travel and shipping
Holiday travel and accommodation prices rose 3.7 per cent in the year to October, down from 12.6 per cent in September. Higher travel demand in 2022, compared to COVID-19-affected 2021, has seen higher prices for airfares and accommodation.
The fall in holiday travel and accommodation was driven by the end of the school holidays and the end of the peak tourist season for travel to Europe and America.
The federal government’s temporary cut to the fuel excise ended on September 29. This meant the fuel tax rate of 46 cents a litre was reinstated, up from the temporary cut to 22 cents, which had applied from March 30.
Following this, fuel prices increased 11.8 per cent in the year to October, up from 10.1 per cent in September.
There is some hope on the horizon for shipping costs, which have risen sharply in the past 12 months. That’s brought pain for importers, which has been passed on to consumers.
But one business boss said the outlook was slightly more promising, with some prices starting to plateau – or even fall.
“We’re starting to see a reduction in shipping costs to Australia, but then increases in production costs,” Eco Outdoor chief executive Ben Kerr told the ABC.
“But I think definitely, we’ve seen the peak. I would say prices are going to stay steady.”
Offsetting that was the jump in production costs, driven by spiralling energy costs for European manufacturers due to the ongoing conflict in Ukraine.
Housing
Low vacancy rates caused a rise in rents, which were up 3.5 per cent in October compared to 2.9 per cent in September.
Separate figures from the ABS showed new dwelling approvals fell 6 per cent in October after dropping 8.1 per cent in September.
Apartment approvals led the decline, while private-sector houses decreased 2.2 per cent.
Completed construction work data rose 2.2 per cent in the September quarter as the industry continued to work through a significant backlog of work, ABS data shows.
After a depressed June quarter reading, residential building activity lifted by 1.3 per cent over the September quarter.
Non-residential building activity increased by 1.1 per cent over the quarter, with activity expected to remain strong due to a sizeable pipeline of new projects.
– with AAP
