The clothing and footwear sector in Australia has seen an annual deflation of negative 1.1% in the December 2023 quarter, new Australian Bureau of Statistics (ABS) data has revealed.
Deflation, where prices are lower compared to 12 months ago, has been seen in imported goods, with household appliances also in negative growth at 0.2%.
The main contributor to the drop in clothing and footwear was garments for women (down 2.7%), footwear for women (down 5.4%) and accessories (down 0.5%).
This deflation is despite an overall annual growth in the consumer price index (CPI) of 4.1%, driven by insurance services and alcohol and tobacco.
Quarter-on-quarter, CPI rose 0.6% overall in the December 2023 quarter compared to September 2023, with clothing and footwear up just 0.5%.
Garments led the lift (up 1.9%), which increased with new summer stock coming into season. The rise was moderated by price falls in November due to promotional activity, including Black Friday and Cyber Monday sales.
Offsetting the rise were falls for accessories and clothing services (down 1.4%) and footwear (down 0.6%).
The slow down in overall quarterly CPI in December 2023 - which was less than what was recorded in September 2023 quarter (1.2%) - was driven by negative quarterly CPI in household furnishings and appliances (1%), transport (0.2%) and education (0.1%).
Alcohol and tobacco held the quarterly CPI up, with the category up 2.8% from September 2023, alongside insurance (1.7%) and housing (1%).
Housing was driven by new dwellings purchased by owner occupiers (1.5%), rents (0.9%) and utilities (0.6%).
ABS head of prices statistics Michelle Marquardt said the recent quarterly CPI rise of 0.6% was the smallest lift since the March 2021 quarter.
“While prices continued to rise for most goods and services, annual CPI inflation has fallen from a peak of 7.8 per cent in December 2022, to 4.1 per cent in December 2023,” Marquardt said.
“Higher labour and material costs contributed to price rises this quarter for construction of new dwellings. The 1.5 per cent increase is slightly higher than the 1.3 per cent rise in September 2023 quarter.”
Rental prices rose 0.9% for the quarter, following a 2.2% rise in the September quarter. The rate of quarterly growth was moderated by changes to Commonwealth Rent Assistance. Excluding the changes to rent assistance, rental prices would have increased by 2.2% in the December 2023 quarter.
Insurance had a strong quarterly movement of 3.8%, following the 2.8% rise in September 2023 quarter.
“The increase in insurance was due to higher premiums across motor vehicle, house and home contents insurance,” Marquardt said. “Over the past twelve months, insurance rose 16.2%, making it the largest annual rise since March 2001.”
Food and non-alcoholic beverage prices rose this quarter, although the rise was the smallest since September 2021, ABS data showed. The rise was driven by meals out and takeaway foods (0.9%), food products not elsewhere classified (1.9%), and bread and cereal products (1.9%).
Partially offsetting the quarterly rise were price falls for meat and seafood as well as fruit and vegetables, both down 1.2% respectively.
"Meat and seafood prices fell this quarter due to increased supply leading to price drops for lamb and goat of 12.1%, and beef and veal of 1.5%,” Marquardt said.
Regarding underlying inflation measures, annual trimmed mean inflation was 4.2%, down from 5.1% in the September quarter.
This is the fourth quarter in a row of lower annual trimmed mean inflation, down from the peak of 6.8% in the December 2022 quarter.
Underlying inflation measures reduce the impact of irregular or temporary price changes in the CPI.