Inflation remains in RBA's target range

The monthly Consumer Price Index (CPI) indicator rose 2.1% in the 12 months to October 2024, according to the latest data from the Australian Bureau of Statistics (ABS), in line with the Reserve Bank of Australia's (RBA) target range.

"Annual inflation was steady at 2.1% in October and remains the lowest annual inflation since July 2021," ABS head of prices statistics Michelle Marquardt said.

The top contributors to the annual movement at the group level were food and non-alcoholic beverages (+3.3%), recreation and culture (+4.3%), and alcohol and tobacco (+6%).

Annual CPI inflation has fallen from 3.8% in June to 2.1% in October due, in part, to significant price falls in electricity and automotive fuel.

Electricity fell 35.6% in the 12 months to October, which is the largest annual fall in the electricity series ever recorded in the CPI. Automotive fuel prices fell 11.5% over the past 12 months after repeated price falls in recent months.

"The falls in electricity and fuel had a significant impact on the annual CPI measure this month. When prices for some items move by large amounts, measures of underlying inflation like the CPI excluding volatile items and holiday travel, and the trimmed mean can provide additional insights into how inflation is trending," Marquardt said.

"Annual trimmed mean inflation was 3.5%, up from 3.2% in the previous month and similar to where it was in August. The CPI excluding volatile items and holiday travel was 2.4% in the 12 months to October, down from 2.7% in September."

As has been the case in previous months, the ABS said Commonwealth and government subsidies also drove the large decreases in electricity prices.

"Commonwealth government and State government rebates continue to reduce household out-of-pocket expenses for electricity, leading to a 12.3% fall in electricity prices in the month of October. This follows large falls in the previous three months since the introduction of the rebates," Marquardt said.

Housing rose 0.2% in the 12 months to October, down from a 1.6% annual rise to September. The large fall in electricity prices mostly offset higher rents and new dwelling prices.

"The annual rise in rents of 6.7% was partly offset by an increase in Commonwealth Rent Assistance (CRA). The maximum rate available for CRA rose by 10% in September 2024 on top of the usual CPI indexation on March 20 and September 20. Without the CRA changes, rents would have risen by 8.1% in the 12 months to October," Marquardt said.