Inflation is heading in the right direction – latest CPI figuers

Key takeaways

Monthly CPI indicator fell to 4.3% year on year from 4.9%

Ex Fuel, Fruit & Veg and Travel slows to 4.8% y/y from 5.1%y/y

Detail suggests still elevated services inflation, but also some moderation

Data does not challenge the RBA’s inflation forecasts, more likely to undershoot

Nothing in the data supports a rate increase in February, nor does it support a rate cut

The Monthly CPI Indicator rose 4.3% in the year to November, down from 4.9%yr in October and a recent peak of 8.4%yr in December 2022.

The RBA will place more emphasis on the quarterly CPI stats that come out at the end of the month, but there is nothing in this data to suggest another rate rise in February.

All Groups Monthly Cpi Indicator, Annual Movement (%)

Michelle Marquardt, ABS head of prices statistics, said:

“This month’s annual increase of 4.3 per cent is down from the 4.9 per cent rise in October and is the smallest annual increase since January 2022.”

The most significant contributors to the November annual increase were Housing (+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 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 in November was 4.8 per cent, lower than the annual rise of 5.1 per cent in October,” Ms Marquardt said.

Housing rose 6.6 per cent in the 12 months to November, up from the 6.1 per cent annual increase in October. New dwelling prices rose 5.5 per cent over the year, reflecting higher labour and material costs. 

Rent prices rose 7.1 per cent in the 12 months to November, reflecting low vacancy rates and a tight rental market. 

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