Alarming inflation in June
Consumer price index (CPI) rose by 1.0% in the June quarter 2024, resulting in an annualised inflation rate of 3.8%. This marks the first lift in annual inflation since the December 2022 quarter.
Producer price index (PPI) reversed its easing trend to grow by 4.8% in the June quarter.
This indicates that inflation is still a long way from landing within the RBA’s target band of 2-3%. Cuts to interest rates are unlikely to be seen in the near future.
WPI sustained well above average
The Wage Price Index (WPI) rose 4.1% in the June quarter. Annual wage growth has at 4.0% of above for the past year, well above the long-run average of 2.4% p.a.
The WPI (y/y) was 3.9% for the public sector and 4.1% for private. The increase in public sector wage growth reflects changes to new state and federal wage policies implemented across 2023.
The RBA predicts that WPI will ease to 3.3% by the end of 2026 while, Treasury forecasts 3.25% by mid-2026. These forecasts indicate that wage increases will exceed the long-term average (2.4%) through to 2026.
Industrial contraction accelerates
The living cost index for all household types were higher than CPI in June 2024, for the first time since December 2010.
Employee households are still facing the highest cost of living increases, rising 6.2% p.a. in June.
This suggest underlying cost pressures on employee households are much higher than implied by headline CPI numbers (3.8%).
Insurance and financial services, mortgage interest charges, and food and housing were the main contributors to increases.
Employee turnover eases from record high
Eight percent of the Australian workforce changed their employer in the year to February 2024 (ABS data). This was 1.5% lower than the previous year, the highest job turnover rate since 2012. Job turnover was slightly lower for men (7.9%) than women (8.2%).
Accommodation and food services had the highest job turnover rate in Australia (15.7%). Above average rates were seen across info and telecoms, mining, administration, retail trade and construction. Job turnover was lower in agriculture, forestry and fishing, education, and financial services.
Varied turnover across the industries
Six out of 13 sectors reported business turnover growth in June 2024 (ABS data).
Consumer facing sectors had a strong June, most of the top performers were consumer-oriented such as telecoms, utilities, and accommodation and food.
Manufacturing and wholesale trade reported low growth lifting 0.4% and 0.2% respectively.
Among the seven sectors that performed poorly in June, logistics and warehousing sector was the lowest with a 2.6% contraction. This was followed by contractions in ‘other services’, arts and recreation, mining, construction and retail trade.
Industrial contraction accelerates
Australia's main container ports - including Brisbane, Melbourne, Fremantle, Port Botany, and Adelaide - each dropped significantly in the World Bank's CPPI ranking in 2023. All of them now sit in the bottom quarter of the global ranking; Fremantle port in the bottom 10%.
With importers and exporters already grappling with the rising shipping costs that are affecting the global market, Australia’s slipping ports performance further weakens the competitiveness of Aussie traders. It also affects Australian households, with weaker ports performance contributing to the cost increases of consumer goods at a time when inflationary pressures are squeezing budgets.
