The result for the quarter is substantially lower than what had been expected by the Reserve Bank which holds its first meeting of the year on February 17 and 18. In November, the bank said it expected underlying inflation to be at 3.4 per cent in the December quarter.
The bureau’s head of prices statistics, Michelle Marquardt, said the 0.2 per cent quarterly increase, after a similar lift in the September quarter, was the lowest lift in inflation since the depths of the COVID pandemic.
She said non-discretionary inflation – price rises of necessities – fell to 1.8 per cent, while for discretionary goods it was 3.2 per cent.
Overall food prices rose by 0.2 per cent in the quarter to be up by 3 per cent over the past year. Higher-priced lamb, bread products and takeaway foods continued to add to food costs, but there was a 3.3 per cent fall in the prices of fruit and vegetables due to better growing conditions for berries, grapes and salad vegetables.
The 3.2 per cent rise in discretionary goods and services – those considered “optional” purchases – was driven by higher domestic holiday travel and accommodation as people took school holiday trips.
“Non-discretionary inflation was lower than discretionary inflation for the first time in nearly four years,” said Marquardt.
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The fall in global oil prices continues to ease the pressure on motorists, with petrol prices now 7.9 per cent lower than a year ago.
Services inflation, which has remained persistently high in recent years, slipped from 4.6 per cent in September to 4.3 per cent in the December quarter.
However, an ongoing pressure on households has been soaring insurance prices. The bureau noted another 1.1 per cent in the quarter, but it was the smallest quarterly increase since mid-2022. Over the past year, financial service prices have climbed by 5.4 per cent, due largely to an 11 per cent jump in insurance costs.
Among the capital cities, overall consumer prices in Sydney, Adelaide and Darwin fell by 0.1 per cent in the quarter. Sydney’s annual inflation rate is now 2.4 per cent while in Melbourne it is 2.5 per cent. The lowest inflation rate among the nation’s capitals is 1.5 per cent in Hobart.
More to come.
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