Inflation has risen by the lowest rate in almost two years, prompting conjecture that rate rise relief could be on the way.
The monthly Consumer Price Index (CPI) indicator, the benchmark for broad inflation, rose 4.3 per cent in the 12 months to November 2023, according to the latest data from the Australian Bureau of Statistics (ABS).
It was close to most analysts’ predictions of a soft change to 4.4 per cent as cost-of-living pressures begin to ease.
ABS head of prices statistics Michelle Marquardt said the increase was down from the 4.9 per cent rise in October and the smallest annual increase since January, 2022.
The ABS said the most significant contributors to the November annual increase were housing (up 6.6 per cent), food and non-alcoholic beverages (4.6 per cent), insurance and financial services (8.8 per cent), and alcohol and tobacco (6.4 per cent).
"CPI inflation is often impacted by items with volatile price changes such as vehicle fuel, fruit and vegetables, and holiday travel,” Marquardt said.
“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 in November was 4.8 per cent, lower than the annual rise of 5.1 per cent in October.”
The RBA made no change to interest rates at its last meeting of 2023, on the back of 13 rate rises since May, 2022.
Moody’s Analytics economist Harry Murphy Cruise said it was “hard to think of better news to start the year for Aussie households, businesses and the Reserve Bank of Australia”.
“Headline inflation dropped … to its lowest point since January 2022. Better still, measures of underlying inflation, which strip out volatile items such as fuel and holiday travel, are also retreating at pace.
“And for a cherry on top, prices are actually falling in 2 of the 11 price baskets.
“The data confirms our view that interest rates won’t rise any further this year.
“That said, households and businesses will likely have to wait until the September quarter before borrowing costs move lower, with still-sticky services inflation and the upcoming stage three tax cuts being a handbrake on inflation’s downtrend.”
The ABS also released engineering and construction activity for the September, 2023 quarter which racked up its sixth consequence quarter of growth.
The total volume of work done was up by 1.9 per cent compared to the previous quarter and is now 14.3 per cent higher than a year earlier.
The public sector projects continue to be the major driver of activity.
