Annual inflation for June quarter sees spike

By Neil Griffiths
 — 1 minute read

Annual inflation for the June 2021 quarter has increased but a chief economist says the figures should not be surprising.

The latest ABS CPI for June showed that inflation increased to 3.8 per cent following a rise of 1.1 per cent in the March quarter however CreditorWatch’s Harley Dale said that, given Australia was in recession this time last year and experienced deflation of -1.9 percent, it is no cause for concern.

“From this exceptionally low base, we have naturally seen a big rise for this June quarter,” Mr Dale said.


“Today’s results, therefore, show little surprises and the RBA are likely to look straight through this latest inflation update.”

ABS’ head of statistics, Michelle Marquardt, also noted that over the five quarters from the March 2020 quarter to the June 2021 quarter, inflation rose 1.9 per cent.

“The annual CPI movement was significantly influenced by COVID-19 related price changes from this time last year,” Ms Marquardt said.

“Key drivers included the full unwinding of the federal government’s free childcare package implemented in the June quarter last year, as well as a full return from the drop in fuel prices seen in the same quarter. These ‘base effects’ led to a sharp increase in the annual CPI movement.

“In situations such as this, it is useful to consider underlying inflation measures such as the trimmed mean, which are designed to remove large, one-off price impacts.

“Additional context can be gained by comparing the current CPI to pre-pandemic levels in the March 2020 quarter.” 

Overall, the CPI rose 0.8 per cent in the June quarter, which Ms Marquardt said could be largely attributed to rising fuel prices, which have “surpassed pre-pandemic levels”.


Annual inflation for June quarter sees spike
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