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Inflation remains steady, undershoots expectations

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The ABS has released its monthly consumer price index indicator.

The consumer price index (CPI) rose 3.4 per cent in the 12 months to February 2024, according to the latest monthly CPI indicator from the Australian Bureau of Statistics (ABS), level with the 3.4 per cent lift a month earlier.

“Annual inflation was unchanged in February and has been 3.4 per cent for three consecutive months,” said Michelle Marquardt, ABS head of prices statistics.

It came in below market forecasts of a 3.5 per cent rise.

The most significant contributors to the February annual increase were housing (+4.6 per cent), food and non-alcoholic beverages (+3.6 per cent), alcohol and tobacco (+6.1 per cent) and insurance and financial services (+8.4 per cent).

"CPI inflation is often impacted by items with volatile price changes like Automotive fuel, Fruit and vegetables, and Holiday travel. It can be helpful to exclude these items from the headline CPI to provide a view of underlying inflation.

"When excluding these volatile items from the monthly CPI indicator, the annual rise to February was 3.9 per cent, down from 4.1 per cent to January. Annual inflation excluding volatile items has continued to slow over the last 14 months from a high of 7.2 per cent in December 2022,” Ms Marquardt said.

Housing rose 4.6 per cent in the 12 months to February, unchanged from January, while increases in the prices of food and non-alcoholic beverages slowed this month to 3.6 per cent from the 4.4 per cent annual increase to January.

Insurance and financial services rose 8.4 per cent in the 12 months to February. This was driven by insurance, up 16.5 per cent over the past 12 months with rises in premiums across all insurance types due to higher reinsurance, natural disaster and claim costs.

Holiday travel and accommodation prices fell 1.3 per cent in the 12 months to February, following a 7.1 per cent annual fall to January. This was driven by falls in domestic holiday travel and accommodation.

“Although Taylor Swift performances saw hotel prices rise in Sydney and Melbourne, elsewhere accommodation and airfare prices fell in February due to the end of the peak travel during the January school holiday period,” Ms Marquardt said.