Updated 29 May 2024
The Consumer Price Index (CPI) increased by 1.0% in the March 2024 quarter, stronger than market expectations.
Quarterly CPI inflation rose faster in March than December, rising from 0.6% to 1.0% per quarter. Annualised inflation continued to fall to 3.6% p.a. However, these inflation figures exceeded market expectations, with quarterly inflation rising in the start of the year.
After being stable for three consecutive months from Dec 2023 to Feb 2024, the monthly CPI indicator increased 0.1% each month to end up at 3.6% p.a. in April 2024.
Previous official forecasts suggested that CPI would reach 3.2% by the end of 2024, then continue to fall over the coming eighteen months.
The current annual figure (3.6%) together with its quarterly and monthly figures suggest inflation may be stickier than expected.
The Producer Price Index (PPI) – a measure of industrial prices – reversed the downward trend and grew by 4.3% in the March quarter.
Key contributors to rising prices in the March quarter were education (+5.9 %), health (+2.8 %), insurance (+2.0%), and food and non-alcoholic beverages (+0.9 %) and housing (+0.7 %). Price falls were recorded only for clothing and footwear (-1.1%), communication (-0.3%), recreation and culture (-0.1%) and furniture and household equipment (-0.1%).
Annual goods inflation eased to 3.1% in the March quarter, a decrease from 3.8% in the December quarter. Most goods eased in December 2023 with some goods (clothing, footwear, furniture, home appliances and meat and seafood) seeing deflation over the past year. This reflects easing pressures of global and local supply chains.
Annual inflation for services eased to 4.3% from 4.6% in the March quarter. Services inflation is now stronger than for goods.
The Consumer Price Index (CPI) measures changes in the price of a ‘basket’ of goods and services which account for a high proportion of expenditure by metropolitan households. Comprehensive CPI data is published by the Australian Bureau of Statistics quarterly, while a reduced price survey is conducted every month to supplement the quarterly data.
The Quarterly CPI measure is considered the more reliable indicator of inflation, as it measures all consumer prices. The monthly CPI measure is less accurate, but provides more timely insights on price changes that complement the quarterly release.
The Producer Price Index (PPI) measures changes in the price of industrial goods as they are produced. Some products – for example food – are measured in both the CPI and PPI indicators. PPI measures the price obtained by the producer, while CPI measures the price paid by the final consumer.
For more information from the ABS (including advice on using the CPI in contracts) see: https://www.abs.gov.au/statistics/detailed-methodology-information/information-papers/use-price-indexes-contracts
Ai Group Research & Economics Team
Website: Research and Economics Resource Centre
Email: economics@aigroup.com.au
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