WEEKLY E-MAIL

29 April 2024

CPI ROSE 1.0% IN THE MARCH QUARTER

By Rebecca Dhillon

Latest inflation data from the Australian Bureau of Statistics (ABS) show the Consumer Price Index (CPI) rose 1.0% in the March quarter, leaving the annual inflation rate at 3.6%.

Education (up 5.9%), health (up 2.8%), housing (up 0.7%) and food (up 0.9%) were the most significant contributors to the quarterly result. Education fees increased with the start of the calendar year, and prices for medical and hospital services typically rise in the March quarter as GPs and other health service providers review their consultation fees. The rise in housing was driven by increasing rents and new home purchases by owner occupiers.

While the March data was higher than many expected, Australia’s inflation rate has fallen for the fifth successive quarter, having peaked at 7.8% in December 2022, and is now close to the Reserve Bank’s (RBA) target of 2% – 3%.

Source: Australian Bureau of Statistics (ABS).

Although the data shows prices are moderating in some categories and falling in others, the RBA is likely to be concerned by an increase in services inflation when it comes to the next interest rate decision in May. Interest rates have held steady at 4.35% for three straight meetings as confidence was growing that inflation was on track to their target of 2% – 3%.

In their Monetary Policy statement in February, the RBA expected headline inflation to be at 3.3% by mid-year, but this latest data indicates this will be difficult to achieve.

Inflation remains a key challenge for the economy, with many economists believing the latest data reduces the possibility of interest rate cuts this calendar year. The RBA will update its inflation and economic forecasts in early May, one week before delivery of the budget on May 14.

Rebecca Dhillon
Senior Para-Planner
Authorised Representative No. 453075

If you have any questions or comments, please email me at rebecca@gfmwealth.com.au

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