The new monthly consumer price index (CPI) indicator from the Australian Bureau of Statistics suggests that inflation is still on the rise, with a 6.8 per cent increase in the year to August.
In a statement issued on Thursday, the Australian Bureau of Statistics (ABS) also reported that its monthly indicator had shown annual inflation of 7.0 per cent in July and 6.8 per cent in June.
“The largest contributors, in the 12 months to August, were new dwelling construction, up 20.7 per cent and automotive fuel, up 15.0 per cent,” said Australian statistician David Gruen.
“The slight fall in the annual inflation rate from July to August was mainly due to a decrease in prices for automotive fuel. This saw the annual movement for automotive fuel fall from 43.3 per cent in June to 15.0 per cent in August.”
Excluding the volatile items of fruit, vegetables and fuel, the monthly CPI indicator moved up from an annual increase of 5.5 per cent in June to 6.2 per cent in August.
The ABS has previously made clear that its new indicator will not replace quarterly CPI as Australia’s key measure of inflation. Reserve Bank deputy governor Michele Bullock has also indicated that the data is unlikely to influence the central bank’s next interest rate decision.
However, Dr Gruen noted that the new information provided an early indication of the September quarter CPI due out on 26 October. CPI rose by 1.8 per cent in the June quarter, taking the annual rate of inflation to its highest level since the introduction of GST at 6.1 per cent.
“It’s unlikely Australian inflation has reached its peak despite the slight pullback in CPI figures for August,” commented VanEck portfolio manager Cameron McCormack.
“Strong retail sales data yesterday indicates that Australian consumers are still spending, despite higher rates and higher prices.”
Based on the new data, Commonwealth Bank economists have forecast that the quarterly rate of headline inflation will slow to 1.6 per cent in Q3 for an annual increase of 7.0 per cent.
“The annual rate of inflation will continue to lift but the quarterly pulse of headline and core inflation has not accelerated, and we expect inflation to slow considerably in 2023,” predicted CBA head of Australian economics Gareth Aird and economist Stephen Wu.
Meanwhile, ANZ has maintained its forecast for an annual increase in inflation of 7.0 per cent for Q3, while AMP chief economist Shane Oliver is expecting a higher lift of 7.2 per cent.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.