Inflation eases as the price of essentials falls
Australia's inflation rate has risen slightly during the March quarter, just weeks out from the Reserve Bank's next interest rate decision.
Official consumer price index figures released by the Australian Bureau of Statistics on Wednesday showed headline inflation rose by 0.9 per cent over the quarter due to state subsidies on energy being wound back. It came in at an annual increase of 2.4 per cent, which was unchanged from December 2024.
The all important trimmed mean inflation, which strips out volatile assets and is the preferred RBA measure, came in at 2.9 per cent for the year down from 3.3 per cent in the December quarter.
This was the lowest annual inflation rate since Decemeber 2021.
The main contributor to the headline quarterly inflation rises were housing up 1.7 per cent, education soaring 5.2 per cnet and food and no-alcholic beverages which grew 1.2 per cent.
Much fo the quarterly growth in housing was driven by electiricty which surged 16.3 per cent as the Queensland state gvoverment rebate of $1,000 ended in the quarter.
Annual Goods inflation was 1.3 per cent, up from 0.8 per cent in the previous quarter. The increase in annual Goods inflation was again primarly due to electricity.
Annual Services inflation was 3.7 per cent in the March quarter, down from 4.3 per cent in the December quarter.
'This is the lowest annual outcome for Services inflation since the June 2022 quarter, reflecting easing inflation across a broad range of services, including rents and insurance,' Mr ABS acting head of prices statistics Leigh Merrington said.
Commonwealth Bank economist Stephen Wu previously said if the trimmed mean inflation rate came in at below the RBA's forecast of 0.7 per cent, a May interest rate cut was a 'done deal'.
'Following the March labour force survey, we think a 25 basis point rate cut in May is still more likely than not if the trimmed mean CPI prints in line with the RBA's forecast,' Mr Wu said.
'If the trimmed mean CPI is in line with our forecast (or below), then we consider a rate cut in May is a done deal.'
If CBA is correct with a 25 basis point rate cut, Canstar figures homeowners with a $600,000 mortgage would see their monthly repayments drop by $91.
While the RBA held the official cash rate at 4.10 per cent during the April meeting, it left the door open to future rate cuts.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Age
20 hours ago
- The Age
If bulldusting about productivity was productive, we'd all be billionaires
The least understanding of neoclassical economics shows this thinking is the wrong way round. It's when the cost of labour gets too high that businesses have greater incentive to invest in labour-saving equipment. At present, we're told, business investment spending as a proportion of national income is the lowest it's been in at least 40 years. If so, it's a sign that labour costs are too low, not too high. The other reason firms are motivated to invest in expanding their production capacity is if business is booming. But this is where business risks shooting itself in the foot. Whereas keeping the lid on wages may seem profit-increasing for the individual firm, when all of them do it at the same time, it's profit-reducing. Why? Because the economy is circular. Because wages are by far the greatest source of household income. So the more successful employers are in holding down their wage costs, the less their customers have to spend on whatever businesses are selling. If economic growth is weak – as it is – the first place to look for a reason is the strength of wages growth. The Fair Work Commission has cut the real wages of people on award wages by about 4.5 per cent – something the lobby groups somehow forgot to mention. Fortunately, however, while sensible economists leave the running to the false prophets of the business lobby, my second favourite website, The Conversation, has given a voice to Professor John Buchanan, of the University of Sydney, an expert on the topic who isn't afraid to speak truth to business bulldust. 'In Australia, it has long been accepted that – all things being equal – wages should move with both prices and productivity,' he says. 'Adjusting them for inflation ensures their real value is maintained. Adjusting them for productivity [improvement] means employees share in rising prosperity associated with society becoming more productive over time.' In recent times, however, all things ain't been equal. Depending on how it's measured, the rate of inflation peaked at 7.8 per cent (using the CPI, which excludes mortgage interest rates) or 9.6 per cent (using the living cost index for employed households, which does include them). So the Fair Work Commission has cut the real wages of people on award wages by about 4.5 per cent – something the lobby groups somehow forgot to mention. That's what honest dealers these guys are. If there's a way to fiddle the figures, they'll find it. The supposed real increase of 1.1 per cent in award wages is actually just a reduction in their real fall to about 3.4 per cent. So much for the impossible impost that will send many small businesses to the wall. The commission has always been into swings and roundabouts. Cut real wages now to get inflation down, then, when things are back to normal, start getting real wages back to where they should be. So we can expect more so-called real increases – each of them no doubt dealing death and destruction to the economy. Speaking of fiddling the figures, the commission points out a little-recognised inaccuracy in the conventional way of measuring real wages. It says that, if you take into account that prices rise continuously but wages rise only once a year, award wage workers' overall loss of earnings since July 2021 has been 14.4 per cent. What the lobbyist witch doctors have been doing is concealing the truth that the best explanation for our weak productivity performance is that employers have been seeking to increase their profits by holding down wage costs, rather than by investing in labour-saving technology.
Sydney Morning Herald
20 hours ago
- Sydney Morning Herald
If bulldusting about productivity was productive, we'd all be billionaires
The least understanding of neoclassical economics shows this thinking is the wrong way round. It's when the cost of labour gets too high that businesses have greater incentive to invest in labour-saving equipment. At present, we're told, business investment spending as a proportion of national income is the lowest it's been in at least 40 years. If so, it's a sign that labour costs are too low, not too high. The other reason firms are motivated to invest in expanding their production capacity is if business is booming. But this is where business risks shooting itself in the foot. Whereas keeping the lid on wages may seem profit-increasing for the individual firm, when all of them do it at the same time, it's profit-reducing. Why? Because the economy is circular. Because wages are by far the greatest source of household income. So the more successful employers are in holding down their wage costs, the less their customers have to spend on whatever businesses are selling. If economic growth is weak – as it is – the first place to look for a reason is the strength of wages growth. The Fair Work Commission has cut the real wages of people on award wages by about 4.5 per cent – something the lobby groups somehow forgot to mention. Fortunately, however, while sensible economists leave the running to the false prophets of the business lobby, my second favourite website, The Conversation, has given a voice to Professor John Buchanan, of the University of Sydney, an expert on the topic who isn't afraid to speak truth to business bulldust. 'In Australia, it has long been accepted that – all things being equal – wages should move with both prices and productivity,' he says. 'Adjusting them for inflation ensures their real value is maintained. Adjusting them for productivity [improvement] means employees share in rising prosperity associated with society becoming more productive over time.' In recent times, however, all things ain't been equal. Depending on how it's measured, the rate of inflation peaked at 7.8 per cent (using the CPI, which excludes mortgage interest rates) or 9.6 per cent (using the living cost index for employed households, which does include them). So the Fair Work Commission has cut the real wages of people on award wages by about 4.5 per cent – something the lobby groups somehow forgot to mention. That's what honest dealers these guys are. If there's a way to fiddle the figures, they'll find it. The supposed real increase of 1.1 per cent in award wages is actually just a reduction in their real fall to about 3.4 per cent. So much for the impossible impost that will send many small businesses to the wall. The commission has always been into swings and roundabouts. Cut real wages now to get inflation down, then, when things are back to normal, start getting real wages back to where they should be. So we can expect more so-called real increases – each of them no doubt dealing death and destruction to the economy. Speaking of fiddling the figures, the commission points out a little-recognised inaccuracy in the conventional way of measuring real wages. It says that, if you take into account that prices rise continuously but wages rise only once a year, award wage workers' overall loss of earnings since July 2021 has been 14.4 per cent. What the lobbyist witch doctors have been doing is concealing the truth that the best explanation for our weak productivity performance is that employers have been seeking to increase their profits by holding down wage costs, rather than by investing in labour-saving technology.
Sydney Morning Herald
a day ago
- Sydney Morning Herald
More young Australians working multiple jobs to survive
A record number of young Australians are working more than one part-time job to make ends meet as signs emerge the overall jobs market is starting to soften under the weight of the Reserve Bank's efforts to bring down inflation. Figures from the Australian Bureau of Statistics show the number of people with multiple jobs eased through the first three months of this year, while the proportion of workers getting more than one pay cheque has dropped to a three-year low. The number of Australians with more than one job soared in the wake of COVID pandemic. Between the end of 2019 and December last year, an extra 220,000 people took on at least one additional job, a near-29 per cent increase. The end of the JobKeeper wage subsidy program, a shortage of workers for many industries, and the surge in inflation, combined to encourage people to take on a sideline job to supplement their income. The ABS figures revealed that after peaking at 990,000 at the end of the last year, the number of multiple-job holders eased to 963,000. Almost all of that decline was due to people with a full-time job leaving a part-time gig. But among those in part-time work, the number taking on an extra part-time job lifted. There are now a record 490,200 people with at least two part-time jobs, a 6 per cent increase over the past 12 months. Those part-time jobs are being held down by women at record levels and by people under the age of 24. In 1996, 18.2 per cent of people with multiple jobs were those aged under 24. That proportion has now climbed to 21.8 per cent, while the share of middle-aged Australians with more than one job has eased.
