The Consumer Price Index (CPI) rose 0.8% in the June 2023 quarter and 6.0% annually, according to the latest data from the Australian Bureau of Statistics (ABS).
The new data comes as ANZ-Roy Morgan consumer confidence nears a record-long stretch below the mark of 80.
ABS head of prices statistics Michelle Marquardt said CPI inflation slowed in the June quarter, calling it the lowest quarterly rise since September 2021.
“While prices continued to rise for most goods and services, there were some offsetting price falls this quarter including for domestic holiday travel and accommodation and automotive fuel.”
Clothing and footwear CPI inflation specifically rose 0.6% on the last quarter, with garments up 1.6% and footwear up 1.4%, reportedly due to the introduction of new winter season stock.
In seasonally adjusted terms, fashion CPI inflation fell 0.9%, with ABS citing garments for women (-2.4%) as the main contributor.
Over the past twelve months, the group rose 0.3%. Garments for infants and children (+7.0%) and garments for men (+3.9) were the main contributors.
The most significant contributors to the rise in the June quarter were rents (+2.5%), international holiday travel and accommodation (+6.2%), other financial services (+2.5%) and new dwellings purchased by owner-occupiers (+1.0%).
"Rents recorded the strongest quarterly rise since 1988, reflecting low vacancy rates amid a tight rental market,” Marquardt said. “Rental price growth for flats continued to outpace the growth for houses.
"Higher demand for international travel, particularly to Europe with the start of the European summer peak season, led to price increases. These were partially offset by price falls for travel to Southeast Asia and New Zealand as prices dipped following increases during the Christmas and school holiday periods in December and January.”
Reducing the June quarter rise were price falls for domestic holiday travel and accommodation (-7.2%), electricity (-1.8%), clothing accessories (-2.2%) and automotive fuel (-0.7%).
Annual CPI statistics highlight ‘disinflation’
Annually, CPI rose 6.0%, with new dwellings (+7.8%), rents (+6.7%) and domestic holiday travel and accommodation (+13.9%) the most significant contributors.
“June quarter’s annual increase of 6.0% is lower than the 7.0% annual rise in the March 2023 quarter,” Marquardt said. “This marks the second consecutive quarter of lower annual inflation, also known as ‘disinflation’, from the peak of 7.8% in the December 2022 quarter.”
Underlying inflation measures reduce the impact of irregular or temporary price changes in the CPI, ABS reported. Annual trimmed mean inflation was 5.9%, down from 6.6% in the March quarter.
Annual inflation for goods was 5.8%, down from 7.6% in March. ABS noted prices for most goods continued to be higher than they were 12 months ago, albeit with smaller annual increases for a range of goods including food, furniture, household appliances and clothing.
Annual inflation for services rose to 6.3%, up from 6.1% in the March quarter and is the highest since 2001.
“This is the first time since September 2021 that services inflation has been higher than goods, highlighting the change from 12 months ago when goods like new dwellings and automotive fuel were driving inflation,” Marquardt said. “Now price increases for a range of services like rents, restaurant meals, child-care and insurance are keeping inflation high.”
Consumer confidence nears record-long stretch
The latest CPI inflation statistics come as consumer confidence hits its 21st week below the mark of 80, according to ANZ and Roy Morgan. This week, ANZ-Roy Morgan consumer confidence was up 2.6pts to 75.2 - its highest point since early June.
Consumer Confidence is now 7.2pts below the same week a year ago, and 3.1pts below the 2023 weekly average of 78.3.
Driving the index up this week were increases in positive sentiment regarding personal finances, ANZ and Roy Morgan reported.
Now a fifth of Australians (20% - up 3ppts) say their families are ‘better off’ financially than this time last year compared to 53% (down 4ppts) that say their families are ‘worse off’ financially.
Just under a third of Australians (30% - up 2ppts) expect their family to be ‘better off’ financially this time next year while 36% (down 4ppts) expect to be ‘worse off’.
Only 6% (unchanged) of Australians expect ‘good times’ for the Australian economy over the next twelve months compared to two-fifths (40% - down 2ppts) that expect ‘bad times’.
Despite the short-term positive growth, longer-term expectations have weakened with only 9% (down 2ppts) of Australians expecting ‘good times’ for the economy over the next five years compared to just over a fifth (21% - unchanged) expecting ‘bad times’.
ANZ senior economist Adelaide Timbrell said the rise is mostly due to an increase in renter confidence.
“Among the housing cohorts, confidence jumped 7.9pts for those renting, perhaps due to discourse around rent increases slowing as rate increases slow, or potential rental policy changes,” Timbrell said.
“It rose slightly by 0.9pts for those paying off their homes, while it softened 0.7pts for those who own their homes outright.
“The average confidence level was at its highest since the first week of June but has now stayed below the 80 mark for 21 weeks – one week shy of the record in the 1990–91 recession.”