CPI rose 1.4 per cent in March 2023 quarter: Australia

The Consumer Price Index (CPI) rose 1.4 per cent in the March 2023 quarter and 7.0 per cent annually, according to the latest data from the Australian Bureau of Statistics (ABS).

Michelle Marquardt, ABS head of prices statistics, said “CPI inflation slowed in the March quarter, with the quarterly rise being the lowest since December 2021. While prices continued to rise for most goods and services, many of these increases were smaller than they have been in recent quarters.”

The most significant contributors to this quarter’s rise were medical and hospital services (+4.2 per cent), tertiary education (+9.7 per cent), gas and other household fuels (+14.3 per cent) and domestic holiday travel and accommodation (+4.7 per cent).

“Prices for medical and hospital services typically rise in the March quarter as GPs and other health service providers review their consultation fees, and the Medicare Safety Net is reset at the start of the calendar year. This year some private health insurance premiums also increased in January, adding to the price rise for medical and hospital services,” said Ms Marquardt.

“Tertiary education fees are also indexed at the start of the year. This quarter additional strength was seen in tertiary education as changes in student contribution bands and fees introduced in 2021 as part of the Jobs-ready Graduates Package continued to flow through to the index.”

Price reviews reflecting higher wholesale gas prices led to rises in gas and other household fuels, with rises seen across all eight capital cities and the strongest rise recorded in Melbourne (+22.7 per cent). “This quarter’s rise was notable as prices increased in all eight capital cities, whereas typically only Melbourne’s prices are reviewed in the March quarter,” said Ms Marquardt. Higher prices reflected major events over the past year including the ongoing war in Ukraine and unplanned outages at coal fired power stations.

Strong demand for holiday travel over the school holiday period and the return of major events to some capital cities resulted in price rises for domestic accommodation. These increases were partially offset by small price falls for domestic airfares following significant price rises in recent quarters.

Food prices (+1.6 per cent) continued to rise, driven by fruit and vegetables (+2.4 per cent) and snacks and confectionary (+4.1 per cent). “Potato shortages due to wet weather in key growing regions late last year led to price rises for both potato crisps and frozen potato products, while higher edible oil and packaging prices also contributed to the rise for a range of snack products,” said Ms Marquardt.

“Fruit prices rose due to damaging weather in apple and avocado growing regions late in 2022, as well as typical seasonal rises for apples and citrus.”

Partially offsetting the rise was international holiday travel and accommodation (-8.2 per cent), as some destinations entered their off-peak seasons following significant rises in recent quarters.

Discounting activity by retailers resulted in falls across furniture (-4.6 per cent), major and small appliances (-3.8 per cent and -3.6 per cent) and clothing (-3.2 per cent).

Annually, the CPI rose 7.0 per cent, with new dwellings (+12.7 per cent), domestic holiday travel and accommodation (+25.0 per cent) and electricity (+15.5 per cent) the most significant contributors.

“The annual increase in March of 7.0 per cent was lower than the 7.8 per cent rise in December and 7.3 per cent rise in September. Annual inflation for goods of 7.6 per cent was down from the 9.5 per cent recorded in December, due to price falls for goods such as furniture, household appliances and clothing in the March quarter, as well as automotive fuel prices easing in recent quarters. However, annual inflation for services was 6.1 per cent, up from 5.5 per cent in the December quarter and is the highest since 2001,” Ms Marquardt said.

Underlying inflation measures reduce the impact of irregular or temporary price changes in the CPI. Annual trimmed mean inflation was 6.6 per cent, down from 6.9 per cent in the December quarter.

Today the ABS also released the monthly CPI indicator for March. The monthly indicator rose 6.3 per cent in the 12 months to March, following annual rises of 6.8 per cent in February and 7.4 per cent in January.

Ms Marquardt said, “The annual movement for the monthly indicator eased for a third consecutive month in March. Prices for new dwellings have continued to increase, but at lower rates in recent months compared to early last year. Automotive fuel prices fell through the year (-8.2 per cent), reflecting a year since the initial spike in oil prices when Ukraine was first invaded.”

New dwellings (+11.1 per cent) was the most significant contributor to the rise in the 12 months to March, down from 13.0 per cent in February and 14.7 per cent in January.